Business

Freddie Mac in more losses as head predicts new slump

Freddie Mac offices in Mclean, Virginia
Image caption Freddie Mac's latest loss was not unexpected

US mortgage agency Freddie Mac has suffered a further $4.1bn (£2.5bn) loss on bad home loans in the past quarter.

Meanwhile its head predicted "renewed pressure" on the US housing market.

"We believe it will be a considerable time before the housing market has a sustained recovery," said chief executive Charles Haldeman.

The federal regulator that now oversees the agency recently raised forecast total losses at Freddie and failed sister-company Fannie Mae to $259bn.

Mr Haldeman added: "As we near the end of 2010, the housing market remains fragile, and has recently come under renewed pressure from slowing economic growth, weaker employment and foreclosure uncertainties."

Recent house price figures revealed widespread falls set in again in August, following the expiry in April of a tax credit for homebuyers.

Quasi-nationalised

Freddie's latest loss, for the three months to September, is lower than the $6.7bn the company lost in the same period a year earlier, and came as no surprise to markets.

Freddie asked the US federal government to make a further $100m of capital available - a much lower figure than in previous such requests.

During the 2008 financial crisis, Washington put Freddie Mac and Fannie Mae into "conservatorship" - a quasi-nationalised status in which the federal government promised to maintain their solvency by injecting new equity on demand.

The US government has already committed $148bn in capital injections to Freddie and Fannie.

However, because of continuing loan losses, that figure may increase to between $221bn-$363bn, according to the Federal Housing Finance Agency.

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