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Freddie Mac reported today that its losses during 2009 were less than half of its huge shortfall in 2008.  Net losses in 2009 totaled $21.6 billion on net interest income of $17.1 billion and total revenues of $14.3 billion.  In 2008 the government sponsored enterprise lost $50.1 billion, on net interest income of $6.8 billion and total revenues of ($22.4) billion.  However, after a dividend payment of $4.1 billion on its senior preferred stock held by the U.S. Treasury, the 2009 net loss attributed to stockholders was $25.7 billion or $7.89 per diluted common share.  In 2008 the losses amounted to $34.60 per common diluted share.

Freddie Mac also announced results of the fourth quarter of 2009 during which it lost $6.5 billion compared to ($5.4) billion in the third quarter.  During the third quarter interest income was $4.5 billion, nearly identical to income during Quarter 3.

Results for both reporting periods were negatively impacted by credit related expenses reflecting the economic conditions during the year.  These expenses totaled $7.1 billion in the fourth quarter and $29.8 billion for the full year.  Low Income Housing Tax Credit (LIHTC) partnership expenses also impacted the bottom line at $3.4 billion for the quarter and $4.2 billion for the year.  This expense was driven primarily because the Federal Housing Finance Agency and Treasury Department informed Freddie Mac that it could not sell or transfer these partnerships.  As it could see no other way of disposing of the assets, the carrying value of the partnership agreements was written down to zero as of December 31, 2009.  

Non-interest income during the fourth quarter rose from ($1.4) billion to 883 million.  Included in this figure were net mark-to-market gains of $2.1 billion compared to gains of $42 million during the third quarter.  The fourth quarter gains reflect the effect of higher long-term interest rates and tighter spreads on the company's derivative portfolio, guarantee asset, and trading securities.

Credit related expenses related to provision for credit losses and real estate owned declined during the fourth quarter to $7.1 billion from $7.9 billion in the third quarter but rose to $29.8 billion for all of 2009 compared to $17.5 billion the previous year.  However, the third quarter figure was revised upward by $400 million to correct for errors found in computing earlier single family loan loss reserves.

The company's net worth at the end of 2009 was $4.4 billion.  As a result of the positive net worth, no additional funding from the Treasury Department was required during the fourth quarter under the terms of the Senior Preferred Stock Purchase Agreement.  The company said that it does expect it will request additional draws under its Purchase Agreement in future periods. 

As was largely unreported because it occurred on Christmas Eve, the Purchase Agreement between Treasury and Freddie Mac was amended to essentially remove the existing $200 billion cap on Treasury's funding commitment.  The amendment also changed the requirement that Freddie Mac reduce the size of its mortgage-related investment portfolio by 10 percent a year.  Under the amendment, the required annual reduction will be calculated based on the maximum allowable size of the portfolio rather than the actual balance of the mortgage-related investments portfolio on December 31 of the preceding year.

The company's report covered its accomplishments during the year.  Freddie Mac said it played a critical role in supporting the nation's housing market by:

• Providing $548.4 billion of liquidity to the mortgage market, helping finance approximately 2.2 million conforming single-family loans and approximately 253,000 units of multifamily rental housing.

• Helping more than 272,000 borrowers stay in their homes or sell their properties through the company's long-standing foreclosure avoidance programs and the Home Affordable Modification program (HAMP), including 129,380 loans that remained in HAMP trial periods as of December 31, 2009. Including HAMP and other Freddie Mac programs, the company participated in 65,044 loan modifications, 33,725 repayment plans, 21,355 forbearance agreements and 22,591 pre-foreclosure sales.

• Refinancing approximately $379 billion of single-family loans, creating an estimated $4.5 billion in annual interest savings for borrowers nationwide - this includes approximately 169,000 borrowers whose payments were reduced by an average of $2,000 annually under the Freddie Mac Relief Refinance Mortgage.

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