Page last updated at 22:35 GMT, Wednesday, 11 March 2009

Freddie Mac reports massive loss

Freddie Mac headquarters
Freddie Mac's huge loss follows a similar loss at Fannie Mae

US mortgage giant Freddie Mac has revealed a loss of $50.1bn (36.1bn) for 2008, and said it plans to ask the government for another $31bn of aid.

The company had already received $13.8bn in federal aid last year.

Freddie said the last quarter had been particularly bad, reporting a loss of $23.9bn for the three months to the end of December.

Last month, fellow mortgage company Fannie Mae reported an annual loss of nearly $59bn due to the housing crisis.

It also said it needed $15.2bn in government aid.

The huge losses made by the companies led to the government bailout.

Fannie Mae and Freddie Mac underwrite more than half of all US mortgages.

'Heavy losses'

Freddie Mac is struggling to contain losses and had previously warned that it would ask for an additional $30bn to $35bn from the government.

Buy mortgages from approved lenders and then sell them on to investors - rather than lending directly to borrowers
Guarantee or own around half of the $12 trillion US mortgage market
Are relied on by almost all US mortgage lenders
Supply funds to meet consumer demand for mortgages
Link mortgage lenders with investors - keeping the supply of money widely available and at a lower cost
Have no direct UK equivalent

It said losses were driven by credit losses from declining housing market conditions and writedowns of the value of its mortgage-backed securities.

It also took an $8.3bn charge for tax assets which are now worthless.

"We absorbed heavy financial losses last year," said chief executive David Moffett, who is stepping down this week after only six months in charge.

"But we also provided vital liquidity to the strapped housing market - injecting more than $460bn in mortgage funding in 2008."

In February, President Barack Obama doubled Treasury funding to Freddie Mac and Fannie Mae to $200bn each as part of his plan to tackle the housing crisis.

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