Freddie Mac Needs New Funds to Stay Solvent

During the peak of the financial crisis the government took over the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) which are both government sponsored enterprises (GSE) which were created to enlarge the secondary market for mortgages in the US, to help people buy homes more easily. The two companies were placed under conservatorship on September 7, 2008.

Despite the fact that Freddie Mac posted a net income of $619 million during the fourth quarter of 2011 and additional income of $887 million, it still did not cover the required $1.7 billion dividend payment Freddie Mac needed to pay to the government.

Therefore, in order to keep the mortgage buyer solvent, Freddie Mac asked for $146 million from the Treasury so that they can pay the interest payments on the government funds on their loans from the government which has kept them afloat as a company.

Since the government takeover of Freddie Mac three and a half years ago they have needed $72.2 billion in aid from the government to stay in business.
 

Alyssa Anderson

Alyssa Anderson has been involved in the world of business on several levels for many years. She was the CEO of a start-up high-tech company until its purchase by a global on-line e-business. Alyssa helped formulate marketing strategies for several other companies as an independent consultant, and she has advised local government on methods to achieve appropriate fiscal responsibility. Her opinions are well known through her many editorials which have been published throughout her career in a variety of local and national print media. She has been heard on radio discussing current issues affecting the business community and Alyssa hopes to bring her special brand of commonsense coupled with uncanny insight into her editorial responsibilities as the Business Page editor for Left Justified. Contact Alyssa at alyssa(at)leftjustified.com.

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