Wall Street Journal (05/15/08) P. C2; Hagerty, James R.; Saha-Bubna, Aparajita
Higher mortgage default costs caused Freddie Mac to post a first-quarter net loss of $151 million and a decline in the fair value of net assets to negative $5.2 billion from positive $12.6 billion in the previous quarter. The government-sponsored enterprise's financial statement includes changes in the way it values obligations to mortgage-backed securities investors experiencing default-related losses and the way it treats certain mortgage securities and foreign currency debt; without these accounting changes, Freddie Mac's loss would have surpassed the $2 billion mark. Freddie Mac officials say steeper fees for guaranteeing mortgage payments will help it manage up to $20 billion in default losses in the coming years, and the GSE will offer common and preferred stock to generate $5.5 billion in capital.
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