During the first quarter, Freddie Mac helped about 40,000 borrowers avoid foreclosure by modifying or refinancing their mortgages so that they can either stay in their homes or sell them.
Yet Freddie’s efforts, through the Freddie Mac Relief Refinance Mortgage and the Administration’s Making Home Affordable Modification program, represent only about five percent of the 800,000 foreclosures filed during the same period, a record number.
The Administration estimates Freddie Mac and Fannie Mae together will refinance four to five million mortgages they guarantee under the refinancing program by the time the program ends on June 10, 2010. An additional three to four million borrowers at risk of losing their homes are expected to reduce payments through the modification program.
However, these programs were not even finalized until March 4 and the modification part didn’t kick in until April 1. Freddie’s 40,000 refis and loan mods are nearly a doubling of the 87,000 loan workouts it achieved last year.
During the quarter, it injected $148 billion of liquidity into the market and helped to drive mortgage rates to historic lows. On May 6, 2009, Treasury increased its funding commitment to $200 billion from $100 billion, increased the size of Freddie’s mortgage-related investments portfolio by $50 billion to $900 billion at December 31, 2009, and increased the allowable debt outstanding to $1,080 billion until December 31, 2010.
Freddie’s single-family refinancing-loan purchase volume during the first quarter increased to approximately $95 billion, nearly four times the refinancing volume the company experienced during the fourth quarter of 2008 and it guaranteed the mortgages of 500,000 single-family home purchases and over70,000 units of rental housing.
Yet Freddie Mac reported a net loss for the quarter of $9.9 billion, or $3.14 per diluted common share,, compared to a net loss of $23.9 billion, or $7.37 per diluted common share, for the fourth quarter of 2008. First quarter results were driven primarily by $9.1 billion in credit-related expenses related to the continued severe economic conditions during the first quarter.
“This was another difficult quarter for Freddie Mac, as declining home prices and the weak economy continued to take a toll on our results,” said Freddie Mac Interim Chief Executive Officer John Koskinen.