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Despite Q3 loss, Freddie Mac still growing

Posted on Tuesday, November 3, 2015 at 9:30:59 AM

Freddie Mac released its third quarter financial results on Tuesday, reporting a $475 million loss in the period from July through September. That is down from the $4.2 billion in net income the mortgage corporation reported in the second quarter of 2015, breaking a pattern of 15 straight profitable quarters. 

Donald H. Layton, Freddie Mac's chief executive officer, stated that the "$0.5 billion loss was caused mainly by the accounting associated with our use of derivatives," or the way the government-controlled company used investments to protect against interest rate swings. In the second quarter, when interest rates rose, the same strategy accounted for a $1.5 billion contribution to earnings. Mr. Layton went on to say that "the business had very strong fundamentals with growing volumes of guarantees and continued improving credit quality in the guarantee businesses." 

No draw from the U.S. Treasury was required following the loss. According to the Wall Street Journal, since being put under government conservatorship in 2008, Freddie Mac has been so profitable that it had sent $96.5 billion to the Treasury, more than the $71.3 billion spent in the taxpayer bailout. With a strong housing market and the many residential financing options open to homebuyers, the company is expected to continue to grow.