- The Washington Times - Thursday, March 12, 2009

Freddie Mac, facing mounting damage from the U.S. housing crisis, said Wednesday it will ask the government for nearly $31 billion in additional aid after posting a gargantuan loss of more than $50 billion last year.

The report comes just weeks after Fannie Mae said it would need more than $15 billion in government assistance after losing almost $60 billion last year.

The two companies, which were seized by the government last fall, are critical to the health of the U.S. real estate market. Together, Fannie and Freddie own or guarantee more than half of all U.S. home loans.

The Treasury Department has pledged up to $400 billion in aid for the duo. But as losses mount, many analysts see the companies remaining under government control, perhaps indefinitely. Until officials know the final bill for the housing crisis, it will be tough to figure out whether they can be spun off as private companies, said debt analyst Jim Vogel of FTN Financial in Memphis, Tenn.

“No one’s going to be confident yet to either plan or look forward until they see another two quarters,” he said.

Meanwhile, Freddie Mac’s chief executive, David Moffett, is stepping down this week after six months on the job.

“We absorbed heavy financial losses,” Mr. Moffett said. “But we also provided vital liquidity to the strapped housing market.”

John Koskinen, a member of Freddie’s board of directors, will temporarily replace Mr. Moffett as the top executive, the company said Wednesday. Mr. Koskinen is a corporate-restructuring specialist who spent two years directing planning for the “Year 2000” computer conversion.

The interim CEO has his work cut out for him.

Freddie’s request for $30.8 billion in federal aid comes on top of $13.8 billion the McLean-based company received last year. Freddie Mac was forced to go back, hat-in-hand, because its net worth - the value of its assets minus the value of its liabilities - fell below zero.

The recent loss was driven by $13.2 billion in hedged trades, $7.2 billion in credit losses from the declining housing market conditions and $7.5 billion in write-downs of the value of its mortgage-backed securities. The company also took a charge of $8.3 billion for now-worthless tax credits.

The faltering economy, driven down by the collapse of the housing bubble, is causing the housing crisis to spread. Nearly 12 percent of all Americans with a mortgage - a record 5.4 million homeowners - were at least one month late or in foreclosure at the end of last year, according to the Mortgage Bankers Association.

Fannie and Freddie are both being called upon to advance President Obama’s agenda of helping up to 9 million borrowers avoid foreclosure through refinanced mortgages or loans that are modified to lower monthly payments.

Freddie Mac said that 1.7 percent of the single-family loans it owns or guarantees were delinquent at the end of the December, up from 1.2 percent in September and 0.65 percent a year earlier. The number of foreclosed properties owned by the company grew to more than 29,000, about double their level at the end of 2007.

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