Mortgage giant Freddie Mac said Tuesday that its after-tax losses from Hurricanes Katrina and Rita to be recorded in the third quarter of 2005 are expected to be in a range of $150 million to $300 million.
“Our primary concern continues to be ensuring that affected borrowers and lenders are obtaining the relief needed to rebuild their lives and get back on their feet financially,” said Richard F. Syron, Freddie Mac chairman and chief executive officer, in a statement.
“We’re doing everything we can to keep mortgage money flowing to the Gulf region and help folks hardest hit by these catastrophic storms,” Syron said.
Freddie Mac will continue to assess the impact of Hurricanes Katrina and Rita on its financial position and results of operations for the third quarter and subsequent periods, the company said Tuesday.
The government-sponsored enterprise said it expects that this estimate represents most of the losses from storm-related damage.
Freddie Mac’s exposure to losses as a result of these storms primarily arises from the company’s guarantee of principal and interest on the Participation Certificates and Structured Securities the company issues, as well as the company’s portfolio holdings of mortgages and mortgage-related securities with underlying collateral in the affected areas.
The company’s estimates of the financial impact of Hurricanes Katrina and Rita reflects a combination of evaluations, model results and prior experience with natural disasters, Freddie Mac said.
Syron said in a statement that these estimates are “inherently imprecise” because of a variety of factors, including the unprecedented nature of the disaster, the inability to access portions of the affected areas and the preliminary nature of the information used to prepare these estimates.
“There can be no assurance that the company’s ultimate losses associated with these events will be within the range described above,” the company said.
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