Industry News

Freddie Mac earnings down 60% in first half of year

Beleaguered mortgage giant's net income falls to $1.64 billion

Freddie Mac's earnings dropped nearly 60 percent in the first half of the year as the mortgage giant emerged from its accounting crisis, the mortgage giant reported Wednesday. The second-largest U.S. buyer of home mortgages reported that its net income fell to $1.64 billion, or $2.22 a share, in January through June 2005, from $4.07 billion, or $5.74 a share, in the same period last year. The government-sponsored enterprise has been working to straighten out a $5 billion misstatement of earnings for 2000-2002. Freddie Mac had not turned in a quarterly financial report since it discovered the accounting problems in June 2003. The earnings report was issued after the close of regular trading. Freddie Mac said the earnings decline was due mainly to a drop in interest income and to losses from changes in the value of financial instruments, known as derivatives, that it uses to hedge against interest-rate and other risk. Interest income is expected to continue to decline this year, ...