New Losses on Freddie Mac
December 21, 2007
There was more bad news out of Freddie Mac recently when the chief executive of Freddie Mac estimated the mortgage finance company would probably lose an additional $5.5 billion to $7.5 billion over the next few years. This would be caused as the housing market continues to drop and home loan defaults continue to rise.
Freddie Mac which is a government-sponsored company has already said it lost about $4.5 billion during the first nine months of this year. According to some experts, it is only going to get worse before it begins to turn around again.
Richard Syron, chairman and CEO, recently stated: “I honestly think it’s going to get tougher before it gets better.” Syron went on to say that the American public has yet to see the real and personal devastation that foreclosures can bring about.
As one might assume, the stock value of Freddie Mac has dropped over recent weeks. Syron’s comments came just one day after Freddie Mac and its much larger government-sponsored rival Fannie Mae reported that they are going to change their current criteria for purchasing delinquent home loans that they have guaranteed so that they can reduce the number they buy from investors.