Freddie Mac Loses $211 Million in First Quarter

Freddie Mac, the No. 2 U.S. mortgage finance company, on Thursday reported an unexpected net loss of $211 million for the first quarter, citing a souring outlook for mortgage credit risk that widened credit spreads.

The loss contrasts with a net gain of $2 billion the company reported for the same period in 2006.

The company reported a net share loss of 46 cents in the first quarter. Excluding unusual items, Freddie Mac was expected to show a profit of $1.09 per share in the first quarter, according to Reuters Estimates.

With this report, Freddie Mac returns to timely quarterly financial reporting for the first time since its 2003 accounting scandal, which led to a $5 billion restatement of past earnings.

The company said mark-to-market losses tied to the wider credit spreads on the mortgages' assets in its portfolio was the main driver of the first-quarter loss.

Freddie Mac also said its fair value, before capital transactions, fell by about $300 million because of the credit spread widening.

"Overall, Freddie Mac's credit guarantee portfolio continued to exhibit credit characteristics that were better than historical averages as measured by current delinquencies, loan-to-value rations and charge-offs," the company said in a release.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

U.S. Video

  • Five occupations that employers will be hiring for most.

  • I'm bullish on crowdfunding, says Steve Case, Case Foundation chairman, discussing the risks and rewards of angel investing. And Daymond John, FUBU founder & CEO, shares his concerns about nonqualified angel investors going into the market and not getting liquidity.

  • Michael Schuman, Time Magazine, explains how the Chinese philosopher's ideas could be influencing Asia's economic rise and why American CEOs may benefit by understanding the history behind the philosophy.