Freddie has set aside provisions of $3.7 billion for credit losses, less than the $5 billion provision it reserved in the second quarter, as mortgage delinquencies have seemingly slowed somewhat. That improvement was offset, however, by a weaker economic outlook, which will likely cause Freddie to lose additional money on foreclosure sales.
The loss comes in a quarter when the mortgage company was forced to suspend foreclosures in certain states after faulty paperwork by some of the nation's top lenders surfaced. JPMorgan Chase, Bank of America, and other top mortgage servicers also suspended seizures in a handful of states.
Both Freddie and its larger cousin Fannie Mae have sustained gargantuan losses, mostly from delinquencies on bad loans as the housing market turned sour. The companies were taken over by the US government two years ago through a process known as conservatorship, and taxpayers are already in the hole for $135 billion, which Treasury has already committed to the two.
The companies are required through the bailout agreement to pay a 10 percent dividend on all aid received from Treasury. Though it seems that the companies' losses have started to diminish, they will likely have to continue borrowing from the government just to make the dividend payments.
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