WASHINGTON - Government-controlled mortgage giant Freddie Mac has requested $6 billion in additional aid after posting a wider loss in the third quarter.
Freddie Mac said Thursday that it lost $6 billion, or $1.86 per share, in the July to September quarter. That compares with a loss of $4.1 billion, or $1.25 a share, in the same quarter of 2010.
This quarter's $6 billion request from taxpayers is the largest since April 2010.
Freddie's losses are increasing mainly for two reasons: Many homeowners are paying less interest because they are able to refinance at lower mortgage rates. And failing and bankrupt mortgage insurers are not paying out as much money when homeowners default.
The government rescued McLean, Va.-based Freddie Mac and sibling company Fannie Mae in September 2008 after massive losses on risky mortgages threatened to topple them. Since then, a federal regulator has controlled their financial decisions.
Taxpayers have spent about $169 billion to rescue Fannie and Freddie, the most expensive bailout of the 2008 financial crisis. The government estimates it could cost up to $51 billion more to support the companies through 2014 after subtracting dividend payments.
Freddie and Fannie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past year.
Many homeowners are refinancing at lower mortgage rates or are shortening the terms of their mortgages, the agency said. While that saves homeowners money, it is pushing Freddie deeper into the red. "In fact, borrowers we helped to refinance will save an average of $2,500 in interest payments during the next year," said Charles Haldeman Jr., Freddie's chief executive.
by Associated Press Nov 4, 2011
Freddie Mac seeks $6 billion in aid
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