rebuild.org finance news:

Back to Latest News Headlines

Freddie Mac Earnings Plunge in 2nd Quarter

[Sep 27, 2007.]


Freddie Mac, which ranks number 2 in the nation in terms of buying home mortgages, saw its earnings plummet 45% in the 2nd quarter.

The home loan giant had to earmark more than $300 million on account of bad loans. The company, which is based in Virginia, is symptomatic of the housing crisis which has rocked the real estate and construction industries over the past year.

More than four dozen lenders have gone bankrupt as a result of the problems in the mortgage industry. Once the news of the 2nd quarter losses broke, shares in Freddie Mac declined 5% to $60.07.

According to officials at Freddie Mac, delinquency rates are rising on both the East and West Coasts, in addition to the economically-damaged Midwest, where unemployment is rampant. The problem appears to have spread from the subprime market to other sectors of the mortgage industry.

Freddie Mac reports that losses from loan defaults increased to 0.02% in the 2nd quarter. The increases are expected to continue into 2008. Freddie Mac makes its earnings from interest payments as well as fees from mortgages that have been sold to investors.

Freddie Mac made $764 million during the quarter ending June 30th. That amounts to $1.02 a share. Last year, profits were in the neighborhood of $1.4 billion, which amounted to $1.93 per share.

Congress formed Freddie Mac and Fannie Mae to help funnel dollars in to the home mortgage sector by purchasing loans from financial institutions and combining them into securities which could then be sold to investors. Freddie Mac and Fannie Mae finance approximately 2/3 of all home mortgages in the U.S. Democrats on Capitol Hill have proposed hiking the individual limit for home mortgages the two companies are permitted to purchase in order to help improve the state of the mortgage sector.

Julie Ann Amos
September 27th 2007

Recent News

  • 30-Year Mortgage Rates Head Downward
    Homeowners received some encouraging news this week, thanks to an item from the mortgage company known as Freddie Mac. [28th September 2007]

  • National Economic Picture Brightens
    The U.S. economic picture brightened this past spring, thanks to an expansion in the gross domestic product. Still, the national housing crisis and problems within the credit card industry mean there continue to be clouds on the horizon.[19th September 2007]

  • President Tries to Help Homeowners Avoid Default
    President George W. Bush is taking action to try to prevent homeowners who took out subprime mortgages from going into default. [19th September 2007]

  • Study Demonstrates Popularity of Check Cards
    A survey by Bankrate demonstrates just how much American consumers are benefiting from debit cards. [19th September 2007]

  • Specter of Recession Looms in the U.S.
    The specter of recession is rising in the U.S., buoyed by the tidalwave of troubles in the stock market and housing sector. [19th September 2007]

  • Fall is the Time for Re-evaluating Credit Card Options
    With fall just around the corner, many people—especially college-age people—may be re-evaluating their credit card options. This year, there are an endless number of possibilities for those seeking to expand their credit horizons [17th September 2007]

  • Barclays Credit Business Reaches Milestone
    Barclays has become the fastest-growing credit card issuer in the U.S., based on figures just released by the company.[17th September 2007]


news subscription:

Easily subscribe to the rebuild.org news feed.

Read our news without even visiting our site!

Subscribe to our news


news archive:

Rebuild.org monthly news archive