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Freddie Mac sets aside $1.2 billion for bad home loans
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WASHINGTON Freddie Mac set aside $1.2 billion in the third quarter to account for bad home loans and the company posted a $2 billion loss Tuesday amid a worsening mortgage crisis.
Losses for the nation's second largest guarantor of home mortgages widened from $715 million last year during the same period.
Freddie Mac said it made the provision for credit losses in the July-September period because of defaults on home loans, which "reflects the significant deterioration of mortgage credit."
The $2 billion loss for McLean, Va.-based Freddie Mac worked out to $3.29 a share, compared with $1.17 a share, in the third quarter of 2006.
Losses far exceeded Wall Street analysts expectations of a 22 cent per share loss, according to a poll by Thomson Financial.
The results for Freddie Mac, together with a recent report by its larger sibling Fannie Mae, heighten investor anxiety over the government-sponsored companies, which had been considered less vulnerable in the housing crisis because have had less exposure to high-risk, subprime mortgages.
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