McLEAN, Va. – Shares in Freddie Mac, battered for more than a month, slumped further yesterday after the secondary mortgage market giant reported an $821 million second quarter loss – more than three times what analysts expected.
Shares in the mortgage finance giant fell almost 20% yesterday to close at just $6.49.
The red ink, the company’s fourth quarterly loss in a row, came just two weeks after the federal government approved bailout plans for Freddie Mac and Fannie Mae, which also is expected to announce large losses over the next few days.
For the first six months of the year Freddie reported a loss of $971 million, or $2.28 a share, compared to a profit of $596 million for the first half last year.
In a sign that mortgage delinquencies and foreclosures are increasing, Freddie set aside $2.5 billion – more than double what it had reserved in the first quarter. The company said the credit problems are emerging mostly in the company's Alt-A portfolio, which contains mortgages with high risk factors such as undocumented borrower income.
Alt-A loans make up 10%, or $190 billion, of Freddie's portfolio. The percentage of those mortgages that were more than 90-days past due rose to 3.72% from 2.32% in the first quarter.
For all of Freddie Mac's loans, the percentage of seriously delinquent loans edged up to 0.82% from 0.74%.
To boost capital, the secondary mortgage market giant said it will sell $5.5 billion worth off stock and cut quarterly dividends to five cents a share from 25 cents.
