Freddie Mac, the nation's second largest mortgage company, reported a first-quarter loss of $211 million (U.S.) because of its interest-rate hedging activities.
"While the full impact of the housing downturn has not been felt, our credit position has remained strong relative to our historical levels and the market as a whole," said CEO of Freddie Mac, Richard F. Syron.
Freddie Mac, which is the government-sponsored company, reported Thursday that it lost 46 cents a share for the three months ended March 31. That contrasted with a profit of $2 billion, or $2.80 a share, a year ago.
Low net income was the result of high mark-to- market losses on the company's portfolio of derivatives and on the company's single-family credit guarantee business. Revenues generated by the company's retained portfolio and credit guarantee portfolio decreased slowly from first quarter 2006.
Freddie Mac expenses became higher, because of higher administrative costs connected with improving the company's internal financial reporting and controls structure, as well as higher credit costs.
HISTORY
Every day Freddie Mac helps millions of families in neighborhoods across America buy their own homes or enjoy quality and affordable rental housing. Since 1970 the company financed more than 50 million homes. How? They link homeowners and renters to the world's capital markets. It is a unique mortgage finance system that makes homeownership a reality for more of America's families.
Freddie Mac also purchases mortgage loans and mortgage-related securities and holds them in our Retained Portfolio for investment purposes. They finance these purchases by issuing short-, medium-, and long-term debt and subordinated debt and equity securities. Their purchases replenish the sources of capital available for mortgage lending to consumers.
Because Freddie Mac exists, millions of Americans benefit from lower mortgage interest rates, readily available home mortgage credit, a wide choice of mortgage products and reduced loan origination costs. Millions of families are also able to rent safe and affordable homes.- Alla Harutyunyan for HULIQ.COM
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