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Dead Constitution See other Dead Constitution Articles Title: Freddie Mac Reports First Quarter 2010 $8 Billion Loss McLean, VA – Freddie Mac (NYSE:FRE) today reported a net loss of $6.7 billion for the quarter ended March 31, 2010, compared to a net loss of $6.5 billion for the quarter ended December 31, 2009. After dividend payments of $1.3 billion on its senior preferred stock to Treasury, Freddie Mac reported a net loss attributable to common stockholders of $8.0 billion, or $2.45 per diluted common share, for the first quarter of 2010, compared to a net loss attributable to common stockholders of $7.8 billion, or $2.39 per diluted common share, for the fourth quarter of 2009. On January 1, 2010, Freddie Mac adopted new accounting standards related to transfers of financial assets and consolidation of variable interest entities (VIEs) (consolidation of VIEs). As these changes in accounting principles were applied prospectively, the results of operations for the quarter ended March 31, 2010 are not directly comparable with the results of operations for prior periods, which reflect the accounting standards in effect during those periods. For more information see “Accounting and Reporting Developments” on page 5 of this release. The company had a net worth deficit of $10.5 billion at March 31, 2010, compared to positive net worth of $4.4 billion at December 31, 2009. This net worth deficit was primarily driven by a significant net decrease in total equity (deficit) of $11.7 billion due to the adverse impact of the consolidation of VIEs. The decline in net worth also resulted from the first quarter 2010 net loss of $6.7 billion and the dividend payment of $1.3 billion to Treasury on the senior preferred stock, partially offset by a $4.8 billion decrease in unrealized losses recorded in AOCI, primarily due to improved values on the company’s available-for-sale securities. “Throughout the first quarter of 2010, Freddie Mac continued to focus on strengthening underwriting and improving credit quality,” said Freddie Mac Chief Executive Officer Charles E. Haldeman, Jr. “At the same time, we helped more than 440,000 families own or rent a home, and more than 71,000 avoid foreclosure. In this difficult economic environment, the stability that Freddie Mac brings to the mortgage market is especially vital. “Though more needs to be done, we are seeing some signs of stabilization in the housing market, including house prices and sales in some key geographic areas,” Haldeman said. “But as we have noted for many months now, housing in America remains fragile with historically high delinquency and foreclosure levels, and high unemployment among the key risks. “Our first quarter 2010 financial results were driven significantly by the required adoption of new accounting standards, along with continued weakness in the housing market,” said Ross J. Kari, Freddie Mac’s chief financial officer. “Upon adoption of the new accounting standards we added $1.5 trillion of assets and liabilities to our balance sheet, and the cumulative effect of these changes was a one-time net decrease of $11.7 billion to total equity. The impact on Freddie Mac was significant relative to others as the nature of our business model amplified the impact of these changes. “Though we are encouraged by signs of modest stabilization in some trends on the credit side of our single-family business, given the many uncertainties in the economy, we remain cautious,” Kari said. “Credit quality remains a major focus for the company, and we are pleased that new business being delivered to us is of notably high credit quality.”
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