Freddie Mac To Tap $6.1 Billion More In Treasury Capital

WASHINGTON — Mortgage giant Freddie Mac is looking for $6.1 billion in additional government aid as the cost to taxpayers from the housing market bust keeps growing.

The McLean, Va.-based company, seized by federal regulators in September, on Tuesday posted a loss of $9.9 billion, or $3.14 per share, for the quarter ending March 31. That compared with a loss of $149 million, or 66 cents a share, in the year-ago period.

The results were driven by $8.8 billion in credit losses due to soaring delinquency rates and falling home prices, and $7.1 billion in writedowns of the value of its mortgage-backed securities. More than $63 billion of Freddie Mac's loans were either 90 days overdue or in foreclosure at the end of March, nearly triple year-ago levels.

The request for federal aid is Freddie Mac's third since the takeover, for a total of about $51 billion.

Sibling company Fannie Mae last week requested $19 billion in additional government aid, bringing the total for both companies up to $85 billion out of a potential $400 billion government lifeline.

"This was another difficult quarter for Freddie Mac, as declining home prices and the weak economy continued to take a toll on our results," Freddie Mac's interim chief executive, John Koskinen, said in a statement.

But he said there were "preliminary signs of slowing in home price declines as low mortgage rates and high affordability take hold."

The White House budget office estimates the tab for rescuing the two companies will reach $173 billion. But even that number could wind up being optimistic, especially as Fannie and Freddie are called upon to put in place the government's plans to refinance or modify up to 9 million mortgages.

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Freddie Mac said it helped around 40,000 borrowers stay in their homes in the first quarter, through refinancing and loan modification programs.

"We will bear the full cost of these modifications for loans we own or guarantee and will not receive a reimbursement" from the government, Freddie Mac said in a regulatory filing. "It is difficult for us to predict the full extent of our activities under these initiatives and assess their impact on us."

Freddie Mac's quarterly loss was far smaller than that of Fannie Mae, which last week posted a loss of more than $23 billion in the same quarter. Fannie Mae was "much more conservative in its assessment of future credit losses," wrote debt analyst Jim Vogel of FTN Financial in Memphis, Tenn.

Washington-based Fannie Mae and Freddie Mac play a vital role in the mortgage market by purchasing loans from banks and selling them to investors. Together, the companies own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all U.S home mortgages.

Freddie Mac has been coping with the loss of several key executives. The company's acting chief financial officer, David Kellermann, died last month in an apparent suicide. David Moffett, the company's first government-appointed CEO, resigned in March, but is returning as a consultant after Kellermann's death.

The two companies lowered their standards for borrowers during the real estate boom and are reeling from the bust. High-risk loans in California, Nevada, Arizona and Florida have come back to haunt the companies. Worse still, the recession is causing reliable homeowners with good credit to default.

Meanwhile, the Obama Administration has yet to say much about its plans for Fannie Mae and Freddie Mac. Earlier this week, the White House said in budget documents that the administration "looks forward to working with the Congress, the regulatory community, and the mortgage industry to determine the best possible long-term role for Fannie Mae and Freddie Mac."