Profits Plunge as Freddie Mac Sets Aside Loan Loss Reserves

McLEAN, Va. – Freddie Mac reported yesterday second quarter earnings fell 45% to $764 million, or $1.02 a share, as the secondary mortgage market giant set aside $320 million to allow for loan losses on new mortgages. In addition, deteriorating credit quality in the mortgage market caused Freddie to reduce the fair market value of its investments by $800 million. Revenues for the second quarter and for the first two quarters of the year were basically flat. Richard Syron, CEO of the mortgage giant, said the company currently is working with regulators and customers to develop, "a market-oriented response that will help provide stability, liquidity and affordability to the national housing and mortgage markets." Many observers are expecting a political and financial plan from Freddie Mac and its sister, Fannie Mae, as well as Congress and the president, to help prevent massive foreclosures on mortgages by millions of U.S. homebuyers with the weakest credit profiles.