Freddie Mac showed disappointing earnings as it tries to rebound from the scandals and mismanagement that plagued it over the past few years. But the question I have is this, if Freddie Mac is such an instrumental part of the mortgage business world, and it can not turn a profit in the most positive climate ever, now that we are in the downturn what will the company do? It is on the hook for 40 percent of the mortgages out there in the United States.
Freddie Mac, the second-largest U.S. mortgage finance company, reported a $480 million net loss in the fourth quarter as bond guarantee fees fell and it lost money on derivatives.
The loss compares with net income of $684 million in the fourth quarter of 2005, the government-chartered company said yesterday. Freddie Mac and the larger Fannie Mae own or provide guarantees on about 40 percent of the $10.5 trillion U.S. residential mortgage market.
Freddie Mac’s results show that the company “is becoming a lower margin, lower volume, lower risk and higher capitalized” business, wrote Jim Vogel, head of agency research at FTN Financial in Memphis, Tenn., in a research note. “That formula means it is going to have to streamline costs and become still more aggressive when odds are in its favor.” via baltimoresun.com.
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Check out David Lereah’s comment in the article posted on my blog!
Please, for your own good, read my blog about the current housing data released
by the NAR on Friday. I’ve posted an article from the Wall Street Journal (Which
you can’t get unless you pay otherwise) and some
of my own comments… The data are hugely misleading due to the seasonal adjustment
that is made.
The biggest story should be the 7.6% drop in median house prices since July
2006… That’s enormous… imagine you bought then with a $20K down payment
and now you have to move… Where’d my money go?
That’s the danger of buying at the top.
Check out my blog to learn more… I spend the time writing because I think
people need to know what the data they are fed actually mean, so they can think
for themselves! Please read!
http://financeguru-eternitus.blogspot.com/