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WASHINGTON, DC-As many feared, Freddie Mac’s Q3 earnings revealed deepening financial problems at the GSE, despite the government’s move to place it and Fannie Mae in conservatorship two months ago. Freddie Mac lost $25.3 billion, or $19.44 per share, this quarter, it reported this morning, and is asking the Treasury Department to extend it $13.8 billion from the $200 billion in government funds that were set aside for the two GSEs in the new ownership structure. In exchange, Treasury will receive preferred shares of the mortgage finance giant. This same quarter last year, the agency lost $1.2 billion, or $2.07 per share.

Freddie Mac’s net interest income and management and guarantee income of $2.7 billion were swamped by its non-interest losses of $12.1 billion, the bulk of which were a $9.1-billion impairment of its securities. It also took a hit from $6 billion in credit losses and a $1.1 billion loss on loans to Lehman Bros.

This report, coupled with Fannie Mae’s $29-billion quarterly loss, reported on Monday, are raising questions as whether the terms of the conservatorship are working for the GSEs. There have been calls for a loosening of terms–much like the way AIG’s bailout was restructured. Equally loud, though, are those voices calling for reanalysis of the GSEs’ role in mortgage finance and whether it is worthwhile to salvage their operations.

For more on the bailout, check out: Real Estate Forum’s: “Can $700 Billion Unclog the Credit Spigot?”

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