Second Largest Mortgage Lender in US Seeking More Funds from Treasury

The U.S.’s second biggest mortgage provider, Freddie Mac, is asking for an additional $30 up to $35 billion to prevent it from falling down.

The company is together with Fannie Mae, its sister institution that was rescued in September by the Government. Its investment portfolio had declined in December, having delinquencies on its loans from 0.2 % to 1.72%. Its extra funds will be derived from a credit line of $100 billion with the set up of the Treasury in keeping the company with a positive net worth.

Freddie Mac didn’t disclose the amount of its losses but it appeared huge, given the recapitalisation scale sought. It received from the Treasury $13.8 billion following the report on its loss in the third quarter of $25.3 billion along with the housing slump and global financial crisis. Thus, during the second quarter, it incurred a loss of $28.9 billion.

Moreover, Freddie Mac was permitted to increase its portfolio in 2009 to $850 billion as it runs under the conservatorship of the government. Thus, its portfolio’s expansion with securities and loans was considered to support its housing market. In December, it entered into contracts to sell or buy mortgages at $25.37 billion in the forthcoming months.

The company stated that the real amount of the draw may vary significantly from this estimate as Freddie Mac goes through its external and internal process for finalising and preparing its financial statements.