Freddie Mac Comes Back for More Bailout

Mortgage company needs more funds

Freddie Mac, a company that has already received billions of dollars of government funding, is asking for another $30.8 billion from the U.S. Treasury.

Right now taxpayers own 79 percent of the company, after the government moved the company into conservatorship in September.

Troubled times

Freddie Mac says it needs the $30.8 billion in cash advance loans because of deep losses it sustained fourth quarter of its fiscal year. The company says it lost $23.9 billion in three months. Over the year in 2008, the company lost $50.1 billion.

Only a week ago, Freddie’s CEO David Moffett, who was appointed in September, announced he would step down from his post. John A. Koskinen was named interim chief executive and Robert R. Glauber interim nonexecutive chairman on Wednesday — the same day the company asked for the additional aid.

Pre-emptive strike

Freddie Mac seems to be preparing for backlash. It already issued a statement regarding the new request for aid:

“Freddie Mac is working hard to serve our expanded mission in this historic crisis, by doing all we can to help stabilize the financial markets and hasten the recovery in housing. We absorbed heavy financial losses last year, driven primarily by mark-to-market items and credit-related expenses. But we also provided vital liquidity to the strapped housing market — injecting more than $460 billion in mortgage funding in 2008.”

Loan refinance program

Freddie Mac plays a big role in Obama’s recently revealed foreclosure prevention plan. People who have mortgages held by Freddie Mac or Fannie Mae can apply for new loan terms to get lower interest rates or longer terms. This is a special privilege for Fannie and Freddie customers because only homeowners who are delinquent on their loans can apply for the other portion of the government’s loan modification program.

There’s no word yet on whether or how the new government aid will affect the loan refinance program.