Tuesday, December 11, 2007

Freddie: More Losses, Record Defaults

by Calculated Risk on 12/11/2007 12:35:00 PM

From Bloomberg: Freddie Expects 4th-Quarter Loss, Record Default Rate

Freddie Mac ... said default rates on mortgages it owns or guarantees are rising to a record, likely leading to a fourth-quarter loss similar to its largest-ever loss last quarter.

``Our fourth-quarter results are not going to be effectively better than they were in the third quarter,'' Chief Executive Officer Richard Syron told investors today at a conference in New York sponsored by Goldman Sachs Group Inc. ``We are not promising a silver bullet, a short-term quick fix.''

Freddie Mac expects a 3 percent to 3.5 percent default rate, exceeding the record 2.4 percent rate on its books in 1991, the company said, according to a slide presentation. Credit losses on the current book of business will be $10 billion to $12 billion, Syron reiterated today. Almost half the impairments were reflected in third-quarter results reported on Nov. 20, the company said.

The decline in housing ``will get tougher before it gets better,'' Syron said.