6 May 2010

US mortagage firm seeks further $10.6b in aid

3:46 pm on 6 May 2010

One of the biggest players in the US mortgage market, Freddie Mac, lost $US8 billion in the first three months of 2010 and said it would ask for a further $US10.6 billion in state aid.

The firm has made a number of federal cash requests since it was taken over by regulators in September 2008.

It said it would continue to need government funds with the US housing market not yet fully recovered.

The new request brings the total cost for rescuing Freddie Mac to $US61.3 billion, the BBC reports.

Freddie Mac hit trouble during the American property boom, when many higher risk, or sub-prime, loans were made which were not repaid.

The US Government feared the losses would harm Freddie Mac's ability to support housing. It placed the company into conservatorship in September 2008 and late last year pledged unlimited financial backing.

Freddie Mac says it is seeing some signs of stabilization in the housing market, but it remains fragile with historically high delinquency and foreclosure levels.

On Wednesday chief executive Charles Haldeman said the firm was looking to beef up its underwriting standards and improve credit quality.