Industry NewsMortgage

Freddie Mac must raise capital as losses grow

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Government-chartered mortgage financier Freddie Mac posted an $821 million net loss in the second quarter, bringing losses for the last 12 months to nearly $1.6 billion. The news raised concerns that the company will have to raise more capital than the $5.5 billion it pledged to raise in May, which could restrict future purchases of mortgages. The company announced it will cut common stock dividends from 25 cents to 5 cents per share, but announced no timetable for raising new capital by issuing stock and securities. In a regulatory filing, the company also revealed that it's picked up the pace of loan modifications and short sales, but that its inventory of foreclosed homes is still growing at a rapid pace, especially in California. Freddie Mac executives say that as of June 30, the company's $37.1 billion in core capital represented a $2.7 billion surplus over minimum requirements set by federal regulators, which are 20 percent higher than statutory minimums set by Cong...