X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

WASHINGTON, DC-One week after a housing bill was signed into law that extended a safety net to Freddie Mac and Fannie Mae, the market was reminded that these agencies are still struggling with larger housing trends that no government bailout can remedy in the short term. Freddie Mac has turned in Q2 earnings that were much worse than Wall Street analysts had expected, with the agency registering an $821 million loss, or $1.63 per share. Analysts had expected a 41-cent per share loss. These numbers are a sharp contrast to the GSE’s performance this time last year, when it earned $729 million, or 96-cents per share.

Total revenue was $1.69 billion, a drop from Q2 2007′s $2.34 billion in total revenue. Almost all of the losses were due to the agency’s single-family guarantee business. However; multifamily, by contrast, performed well for the quarter.

Part of its response will be a dividend cut of 20 cents in Q3, to five cents per share, saving it $500 million a year. Freddie Mac executives told listeners on a conference call that the market’s woes are not over. They predicted continued drops in home housing value, as the housing crisis has reached only the mid-point. Ultimately, it was predicted on the call, home prices could fall by as much as 20% from their peak. Freddie Mac also reaffirmed its decision to raise at lease $5.5 billion of new capital and possible more. Last month it registered with the Securities and Exchange Commission to raise as much as $10 billion of new capital.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.