Freddie Loses $25B, Mentions 'Receivership' Rules in Filing

Freddie Mac posted a $25.3 billion loss in the third quarter, admitted that its negative net worth now totals almost $14 billion, and mentions in a new filing that unless it receives a cash infusion it could be placed into receivership. The company, however, fully expects that Treasury will lend money to bolster its net worth, bringing the firm into a positive cash position. "We expect to receive such funds by Nov. 29," it says in a new filing with the Securities and Exchange Commission. It notes that maintaining a positive net worth "could constrain some of our business activities," including buying residential loans from banks, mortgage companies and other originators. Freddie and its "sister" company Fannie Mae have been operating under a government conservatorship since Sept. 6. The GSE blamed its third-quarter loss on money set aside to deal with its deferred tax assets ($14.3 billion) and $15.1 billion in charges and impairments on "available-for-sale" MBS and other holdings. Earlier this week Fannie Mae posted a $29 billion third-quarter loss and said it was having trouble rolling over its debt.