Freddie Mac reports 1st quarterly gain in 2 years
Wednesday, May 4, 2011
WASHINGTON (AP) — Freddie Mac earned $676 million in the January-March quarter, the first time the bailed-out mortgage giant has reported a quarterly gain in nearly two years.
The government-controlled company requested no additional federal aid Wednesday after receiving $13 billion over the past four quarters.
CEO Charles Haldeman attributed the net income to cost savings and fewer single-family homeowners who have fallen behind on their mortgages. Tighter lending requirements have also helped increase the quality of Freddie’s new loans.
Still, Freddie has lost $25.3 billion in the previous six quarters, and analysts don’t expect the company to report sustained earnings this year.
But despite its net earnings, Freddie Mac reported a 29-cents-a-share loss attributable to common stockholders. That’s because the company takes into account $1.6 billion in dividend payments to the government, its primary shareholder.
The government rescued McLean, Va.-based Freddie Mac and its sibling company Fannie Mae from the brink of failure in September 2008. The government estimates the bailouts will cost taxpayers up to $259 billion.
“This is not necessarily a climb to ongoing profit,” said Jim Vogel, a debt strategist with FTN Financial Capital Markets. “They still have a long way to go.”
Haldeman said the net income shows improvement but acknowledged that the company faces enormous challenges. Millions of potential foreclosures are stalled in backlogged courts or delayed by federal regulators.
Still, Freddie Mac is “moving in the right direction, at least in the way people have expected,” said Mahesh Swaminathan, a strategist at Credit Suisse.
Fannie and Freddie own or guarantee about half of all mortgages in the United States. That adds up to 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.