Mortgage finance giant Freddie Mac said on Thursday it will seek an additional $6 billion from U.S. taxpayers following its worst quarterly loss this year.
The government-owned company reported a comprehensive loss in the third quarter of $4.4 billion, it said in a filing with the U.S. Securities and Exchange Commission. That compared with a $2.5 billion loss for the same three-month period in the prior year.
Despite an income of $4.6 billion, the company registered a net worth deficit of $6.0 billion, which was partly attributed to the $1.6 billion quarterly dividend payment owed to the Treasury.
"The weak labor market and fragile economy continue to weigh heavily on the single-family market, causing many potential buyers to sit on the sidelines or opt to rent despite high affordability and record low mortgage rates," Chief Executive Officer Charles E. Haldeman said in a statement.
Freddie Mac has drawn $72.2 billion from the government since it was taken over at the height of the financial crisis in September 2008. The government seized both Freddie Mac and larger rival company Fannie Mae as mortgage losses at the two firms piled up and threatened them with insolvency.
"Looking ahead, we expect the tepid recovery to continue to put downward pressure on house prices into early next year," Haldeman said.
The regulatory filings for Freddie had shown some signs of improvements this year as the company shuffled less money aside to cover potential credit losses. A majority of the losses associated with credit quality are for loans that were originated from 2005 through 2008, the company said.
Freddie’s weak performance in the third quarter was also in part due to losses on derivatives that are used to hedge exposure to interest rates movements. Freddie posted $4.8 billion worth of derivatives losses for the quarter, compared with $1.1 billion from the same period a year earlier.
The regulator for Freddie Mac and Fannie Mae predicts the two firms’ cumulative net costs are expected to fall to $121 billion to $193 billion through 2014, including future dividend payments. In a report last week, the Federal Housing Finance Agency forecast that in a best-case scenario, the mortgage giants would effectively be paying back $20 billion that they have already drawn.
