McLEAN, Va. – Secondary mortgage market giant Freddie Mac said today it posted a $25.3 billion third quarter loss and needs more government aid.
The loss includes a $14.3 billion charge to reduce the value of deferred tax assets on its vast mortgage portfolio, and the disclosure comes just two days after sister secondary market giant Fannie Mae reported a $29 billion loss for the third quarter.
For the first three quarters of the year Freddie Mac lost $26.3 billion.
Both Fannie and Freddie have changed their accounting for their deferred-tax assets, which can emerge from operating losses, and can be used to reduce future tax expenses. Companies must be able to show they will be profitable if they intend to use the tax assets for earnings in later periods.
As a result of the losses, Freddie Mac's net worth fell to negative $13.8 billion at the end of September, which forced the company to ask for government help.
Both companies, which were taken over by the government in September, are expected to need to tap into the $100 billion line of credit arranged under the federal takeover. Under the terms of the federal conservatorship, Freddie Mac is scheduled to receive an infusion of cash from the Treasury of $13.8 billion by the end of this month.
