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Freddie asks for $19M in aid after 1Q loss

Associated Press Modified: May 3, 2012 at 8:47 am •  Published: May 3, 2012
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WASHINGTON (AP) — Government-controlled mortgage giant Freddie Mac is requesting $19 million in additional federal aid after posting a loss for the first quarter of this year.

The requested amount is less than the $146 million that Freddie received from the government for the fourth quarter of 2011. The company received $7.6 billion for all of 2011 and $13 billion for all of 2010.

McLean, Va.-based Freddie Mac said Thursday that its net loss attributable to common stockholders was $1.2 billion, or 38 cents a share, in the January-March period. That compares with a net loss of $929 million, or 29 cents a share, in the first quarter of 2011.

The government rescued Freddie and larger sibling Fannie Mae in September 2008 after massive losses on risky mortgages threatened to topple them. Taxpayers have spent roughly $170 billion to rescue Fannie and Freddie, the costliest bailout of the 2008 financial crisis. It could cost about $200 billion more to support the companies through 2014 after subtracting dividend payments, according to the government.

The first-quarter net loss takes into account $1.8 billion in dividend payments that Freddie made to the government, its primary shareholder.

Fannie and Freddie are required to pay 10 percent dividends on the government money they receive.

In some past quarters, Freddie hasn't asked for any government aid. But the $19 million it is requesting for the first quarter is the smallest request it has ever made. Freddie has paid more to the government in dividends than it has taken in aid in the last five quarters, the company said.

About a third of the company's holdings are home loans issued between 2005 and 2008, which accounted for 88 percent of its losses in the first quarter. Freddie said those loans are becoming a smaller proportion of its portfolio, and that over time that should have a positive impact on its finances.

Freddie and Washington-based Fannie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans, which are worth more than $5 trillion. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past year.

Freddie CEO Charles E. Haldeman Jr. noted that an effort is underway to streamline the company.

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