Home-mortgage finance company Freddie Mac reported Thursday that their second quarter net income declined by 45 percent. The McLean, Va.-based company says it earned $764 million in the quarter ending on June 30, compared to $1.4 billion a year ago. Total revenue for the lender increased 4.8 percent to $2.26 billion.
"We were not immune to market forces and we continue to take a cautious view toward the housing market,'' Richard F. Syron, CEO, said in a conference call Thursday morning.
Lower net income, according to the lender, was primarily due to a higher provision for credit losses and mark-to-market losses on credit-related items. The company also reportrd that net interest income was flat compared with the first quarter of 2007.
"Our business volumes for the quarter were strong, with continued growth in our credit guarantee portfolio and improved commitments for our retained portfolio. And we are seeing a shift in the market back to more traditional products, including larger volumes of fixed-rate mortgages," says Syron. "On the credit front we are seeing weakening, but we are well positioned relative to the overall marketplace to weather the ongoing disruptions in the mortgage markets and emerge as an even stronger player. Most important, we are working with our regulator, our customers and others to do our part in developing a market oriented response that will help provide stability, liquidity and affordability to the national housing and mortgage markets."
The company has begun discussions with the Office of Federal Housing Enterprise Oversight to raise the cap on the company's portfolio. Federal Reserve Chairman Ben S. Bernanke has said, though, that Freddie Mac and rival Fannie Mae do not need a loosening of regulatory caps to help borrowers threatened with foreclosure.
Freddie Mac's report is just their second quarterly earnings statement in five years. The company stopped providing results after a $5 billion accounting scandal in 2003. The company says that it plans to release its results for the third quarter before Nov. 22.