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 March 23, 2009

Freddie Mac Asking For Help....Again
Mortgage giant Freddie Mac, suffering from the current US housing crisis, announced Wednesday it will request over $30 million in Federal Aid. This after it posted an enormous loss last year in excess of $51 billion. Freddie Mac joins the other mortgage giant, Fannie Mae who recently requested almost $16 billion in aid after losing more than $59 billion last year. Both companies were seized by the government in the fall and are vital to the overall health of the national real estate market. Combined, the two own or guarantee over 50% of the nation's mortgages. The Treasury Dept. has promised aid for the companies up to 400 billion dollars. Many experts predict the companies will remain under the government's control permanently.
In the meantime, the chief executive at Freddie Mac, David Moffett, is stepping down after just 6 months with the company. Moffett will be replaced on an interim basis by a member of the company's board of directors, John Koskinen. Koskinen faces many tough challenges. Freddie's request for federal assistance follows the nearly $14 billion they received in 2008. The company's struggles can be attributed to losses of more than $13 billion in hedged trades, more than $7 billion in credit losses and over $7 billion in losses due to the falling value of its securities.

Freddie's struggles are deepening the housing crisis. More than 11% of those paying off a mortgage, nearly 5.5 million homeowners were behind or already facing foreclosure at 2008's end. This is by far the most at-risk homeowners ever. Freddie Mac reports that 1.8% of its single-family loans and guarantees were behind at the end of last year. That number was just 1.1% in September and .66% at the end of 2007. The number of properties the company held which had been foreclosed was almost 30,000, twice the number from 2007.