Freddie Mac Sinks into the Red

McLEAN, Va. – In another sign of the struggling mortgage market, Freddie Mac reported yesterday that losses on its financial hedges pushed it into the red to the tune of $211 million, or 46 cents a share, in the first quarter, marking the company’s return to regular financial reporting. The first quarter loss compares to a profit of $2 billion, or $2.80 a share, for the first quarter last year. Freddie said that declining interest rates produced a $2 billion loss on its hedging portfolio, compared to a $742 million gain a year ago. The slowing mortgage market also forced a massive decline in business, with first quarter revenues of $424 million, just a fraction of the $2.5 billion in last year’s first quarter. Yesterday ’s report marks Freddie Mac's return to regular quarterly financial reporting. The company hasn't been current on its results since 2002, following an accounting crisis in which it said earnings were misstated to the tune of about $5 billion for 2000 through 2002. Fannie Mae has also ceased regular financial reports.