Freddie Mac Insolvent?
August 6th 2008 21:39
Yesterday, I wrote that the odds of all the Big Three surviving are 95% against. Today at Mover Mike I wrote about Option Arms. I wrote that option ARMS are a problem that is coming at us like a freight train.
Now look at the news from Freddie Mac today:
Freddie Mac Posts Loss, Cuts Dividend as Housing Slump Deepens[/B]
Aug. 6 (Bloomberg) -- Freddie Mac, the U.S. mortgage-finance company hobbled by record foreclosures, slashed its dividend at least 80 percent after posting a quarterly loss that was three times wider than analysts' estimates.
[...]
Freddie has 22,000 properties in foreclosure, more than ever before, and it now anticipates losing 26 percent on each loan, up from 22 percent. McLean, Virginia-based Freddie wrote down the value of subprime and low-quality mortgage securities for the first time, taking a loss of $826 million. Freddie has plunged 76 percent this year on concern the company may not have enough capital to overcome delinquencies on the $2.2 trillion of mortgages it owns and guarantees, prompting Treasury Secretary Henry Paulson to step in with a rescue plan.
``This correction is more severe than what we've seen,' Christopher Whalen, co-founder of independent research firm Institutional Risk Analytics in Torrance, California, said in an interview with Bloomberg radio. [B]``Both Fannie and Freddie are going to be profoundly insolvent by the time we're done with this.'
Aug. 6 (Bloomberg) -- Freddie Mac, the U.S. mortgage-finance company hobbled by record foreclosures, slashed its dividend at least 80 percent after posting a quarterly loss that was three times wider than analysts' estimates.
[...]
Freddie has 22,000 properties in foreclosure, more than ever before, and it now anticipates losing 26 percent on each loan, up from 22 percent. McLean, Virginia-based Freddie wrote down the value of subprime and low-quality mortgage securities for the first time, taking a loss of $826 million. Freddie has plunged 76 percent this year on concern the company may not have enough capital to overcome delinquencies on the $2.2 trillion of mortgages it owns and guarantees, prompting Treasury Secretary Henry Paulson to step in with a rescue plan.
``This correction is more severe than what we've seen,' Christopher Whalen, co-founder of independent research firm Institutional Risk Analytics in Torrance, California, said in an interview with Bloomberg radio. [B]``Both Fannie and Freddie are going to be profoundly insolvent by the time we're done with this.'
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