Freddie Mac Net Drops on Provision for Housing Slump
Posted by mcarey on August 30, 2007 under News | 
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Aug. 30 (Bloomberg) — Freddie Mac, the second-biggest U.S. mortgage finance company, reported quarterly profit fell 45 percent after setting aside $320 million for losses as the housing slump deepened.
Freddie Mac shares fell the most in more than two years after net income declined to $764 million, or $1.02 a share, from $1.4 billion, or $1.93, a year earlier. Revenue dropped 4.8 percent to $2.26 billion, McLean, Virginia-based Freddie Mac said today in a statement.
The provision for loan losses shows the worst real estate market in 16 years has spread beyond subprime borrowers to homeowners with good credit. Freddie Mac, which owns or guarantees about one in every five U.S. residential mortgages, anticipates the slump may last for 18 months, Chief Executive Officer Richard Syron said on a conference call with analysts.
“We were not immune to market forces and we continue to take a cautious view toward the housing market,” Syron said.
Credit losses will persist throughout 2007 and rise next year, Chief Financial Officer Anthony Piszel said during the call.
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