Freddie Mac's Q1 Losses Hit $151 Million

May 14, 2008 3:25 p.m. EST

McLean, VA (AHN) - Like Fannie Mae, the U.S. second largest mortgage finance firm, Freddie Mac, reported a loss for the first quarter of 2008. The loss of Freddie Mac amounted to $151 million or translated to $0.66 a share.

To help cushion Freddie Mac's losses caused by defaulting home loans, the Virginia-based company plans to raise $5.5 billion additional capital.

Compared with Freddie Mac's last quarter 2007 losses of $2.45 billion, the 2008 first quarter loss is significantly lesser, although a bit higher than the $133 million loss for the 1st three months of 2007. It was also a more modest loss compared to rival Fannie Mae, the largest firm, which logged a $2.19 billion loss for the first quarter of 2008.

What helped Freddie Mac improved its profit was an extra $1.3 billion that resulted from changes in the manner the firm valued some of its assets, said Freddie Mac chief executive officer Richard Syron.

Christopher Whalen, a co-founder of the Institutional Risk Analytics, told Bloomberg, "This is probably a combination of short-term accounting effect and some other factors making the numbers look better."