Freddie Mac has once again reached out to the Treasury seeking $6 billion in aid. This is is just another indicator that the housing meltdown still has a long way to go before there is a solid enough foundation to begin to move forward. Freddie Mac reported a quarterly loss of 6 billion or $1.86 per share compared to last year’s same quarter loss of $4.1 billion or $1.25 per share. Yes that’s billions with a B! The total bailout may eventually reach $100 billion.
Freddie’s massive losses seem to be increasing for several obvious reasons: 1. Failing and bankrupt mortgage insurers are not paying out as much money when homeowners default and 2. Most ironically, many homeowners are paying less interest because they are able to refinance at lower rates…great for the consumer, not so much for poor old Freddie.
The punchline? The same consumers in position to refinance their homes and take advantage of the market, make up a portion of the taxpayer base that will continue to be called upon to bail out Uncle Freddie. The Freddie Mac crisis will most likely continue until the economy finds its sea legs![What is Freddie Mac? Click Here]