Freddie Mac Got $6.1 Billion to Curb Government Repo Homes
Virginia-based government-sponsored enterprise Freddie Mac got $6.1 billion from the U.S. Treasury Department to prop up its finances as it operates its programs to help curb lender and government repo homes and stabilize the housing market.
The funds were requested by the Federal Housing Finance Agency, the overseer of Freddie Mac, after Freddie’s liabilities surpassed its assets by over $6 billion.
Since Freddie was put under the care of FHFA in September 2008, Freddie has already received a total of $51.7 billion in funding from the U.S. Treasury. Freddie can still access another $149.3 billion if it needs it to buy more home loans from lenders and help contain lender and government repo homes.
Since September 2008, the recent withdrawal is the third withdrawal Freddie has made.
In the first quarter this year, Freddie Mac reported a $9.9 billion loss or a $3.14 loss per share, with an $8.8 billion loss due to soaring default rates and declining home values and a $7.1 billion loss due to write-downs on mortgage-backed securities.
In 2008, Freddie Mac and Fannie Mae were among the most battered financial institutions due to the flood of foreclosures. Before these institutions could completely collapse and take the whole housing market down with them, the federal government took over and put Freddie Mac under FHFA supervision.
Freddie Mac and Fannie Mae made the housing and mortgage markets well-functioning by buying home loans from lenders and then selling them to securities investors. The two GSEs have purchased or have guaranteed nearly 31 million mortgage loans valued at $5.5 trillion, which is approximately 50 percent of all home mortgages in the country.
Freddie Mac supports the Obama administration’s program to curb lender or government repo properties by administering the loan refinancing scheme and the Home Affordable Modification scheme of the Obama program.
The two schemes were crafted to help distressed American homeowners whose home loans are guaranteed or owned by Freddie Mac.
Freddie Mac said that it has helped about 88,000 families keep their homes or remedy short sales in 2008. Currently, it holds about 7 percent of 2.5 million home loans in default and is helping lenders work out affordable repayment schemes to save houses from becoming lender and government repo homes.
Lastly, Freddie Mac has also been helping in rejuvenating the housing market by sustaining the liquidity of the mortgage markets, keeping mortgage rates affordable and stable and helping curb lender and government repo properties.
