Freddie Expects 2nd-Half Loss for '06

Freddie Mac expects to post a loss for the third and fourth quarters of 2006 despite strong results in the first half of the year, according to the company.Freddie Mac estimated that net income will total $2.5 billion for the first nine months of 2006, up from $1.4 billion for the first nine months of 2005. But the company estimated that it will report a loss of about $550 million for the third quarter of 2006. A 50-basis-point decline in long-term interest rates during the third quarter reversed previous mark-to-market gains in its derivative and credit guarantee portfolios, the government-sponsored enterprise said. Those conditions persisted in the fourth quarter, the company noted. In a conference call with investors and analysts, chief executive officer Richard Syron said Freddie Mac has previously warned investors that changes in accounting policy will add "volatility" to quarterly results. Freddie Mac estimated that its share of the GSE guarantee market slipped to 43% through November 2006, down from 45% in the same period of 2005. Mr. Syron struck a positive tone when talking about housing markets, saying he believes that conditions are starting to improve. The GSE can be found online at http://www.freddiemac.com.