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WASHINGTON: Troubled mortgage finance giant Freddie Mac on Wednesday reported an 821-million-dollar net loss in the second quarter, as the US housing collapse further dug a hole in the company's finances.
At 1.63 dollars per share, the loss was more than triple most analysts' forecasts of 53 cents per share.
Freddie Mac, a government-chartered, shareholder-owned firm, said the financial results were severely impacted by a 2.5-billion-dollar charge for credit losses from rising delinquencies, foreclosures and falling home prices.
Freddie Mac and Fannie Mae, both government-sponsored enterprises (GSEs), underpin roughly half of the US housing market.
The government has taken measures to shore up them up after questions mounted about their solvency sent their shares plunging.
Freddie Mac's second-quarter results showed rapidly deepening troubles for the mortgage finance giant amid the worst housing slump in decades. In the first quarter, the firm posted a net loss of 151 million dollars and took a charge of 1.2 billion dollars for credit losses.
The company reaffirmed its commitment to raise capital. In July, it announced plans to raise 5.5 billion dollars through a new share offering.
"While we expect continued housing and economic weakness will affect our overall performance this year, we continue to maintain a surplus over all regulatory capital requirements," chairman and chief executive Richard Syron said in a statement.
"We remain committed to raising 5.5 billion dollars of new capital and will evaluate raising capital beyond this amount depending on our needs and as market conditions mandate."
Freddie Mac also said it wanted to slash its dividend in the third quarter by at least 80 percent, subject to approval by the board of directors. The plan would cut the dividend from 25 cents to five cents or less per share.
"Freddie Mac's liquidity position remains strong as a result of its continued access to the debt markets at attractive spreads, the company's cash and investments portfolio of approximately 70 billion dollars and an unencumbered agency mortgage-related securities portfolio of approximately 470 billion dollars, which could serve as collateral for additional borrowings," the company said.
- AFP/so
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