Freddie Mac posts loss, seeks $6 bn lifeline

The US government-seized mortgage lender Freddie Mac on Thursday reported another losing quarter, and said it needs $6.0 billion from the government to keep it afloat. Freddie Mac said it had a net loss of $4.4 billion for the third quarter, compared with a $2.1 billion loss in the year-ago quarter. The McLean, Virginia-based firm said the Federal Housing Finance Agency (FHFA), which oversees both Freddie and its larger sister company Fannie Mae, would ask the Treasury for $6.0 billion to wipe out its deficit. The new cash injection would cover both accumulated losses and a $1.6 billion quarterly dividend payment it has to pay to the Treasury. The new money would bring to $72.2 billion in taxpayer funds the government has pumped into the firm since it was nationalized in September 2008. The federal government took over Freddie and Fannie as they faced bankruptcy amid the financial meltdown whose epicenter was the US housing market. The FHFA was named their conservator. "The weak labor market and fragile economy continue to weigh heavily on the single-family market, causing many potential buyers to sit on the sidelines or opt to rent despite high affordability and record-low mortgage rates," Freddie Mac's chief executive, Charles Haldeman, said in the statement. "Looking ahead, we expect the tepid recovery to continue to put downward pressure on house prices into early next year." Haldeman announced in October that he wants to step down next year, after a transition period with a successor. Freddie Mac, which the government wants to dismantle, along with Fannie Mae, by 2018, has been able to only slowly chip away at its debt pile. Total debt stood at $2.16 trillion on September 30, compared with $2.18 trillion on June 30. Since its nationalization, Freddie has posted only one quarter of profit: $676 million in the first quarter of 2011. Separately, the company said the average rate on a 30-year fixed mortgage plunged to a near-record low of 4.00 percent Thursday from 4.10 percent a week ago "as investors rushed to US Treasury bonds amid concerns over the European debt market." The 4.00 percent rate was the second-lowest since the popular 30-year mortgage rate hit a record average low of 3.94 percent on October 6, it said.