Freddie Now, Fannie Later

Freddie Mac, the second-biggest U.S. mortgage buyer, said 2004 profit fell 42 percent amid a drop in the value of financial contracts used to protect against swings in interest rates. Net income decreased to $2.8 billion, or $3.78 a share, from $4.9 billion, or $6.79 a share, in 2003.

Freddie Mac had a $4.5 billion loss on derivatives used to protect its mortgage assets. The loss, which isn't realized since the derivatives are held to maturity, compared with gains of $39 million in 2003 and $5.3 billion in 2002.

Freddie Mac(FHLMC)and Fannie Mae(FNMA)are the two largest mortgage buyers. Both are headed for financial disaster and will require a government bailout sometime in the near future.

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FHLMC Income falls 42%

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