Freddie Takes Hit; But '05 Earnings Total $2.5 Billion

Freddie Mac, which is still not current on its financial reporting, unveiled preliminary earnings of $2.5 billion for 2005 while revealing a $500 million write down in the fourth quarter tied to its holdings of interest-only assets.During a Friday morning conference call, company EVP of investments Patty Cook described the hit as a "mark to market" accounting adjustment designed to make its financial reporting more transparent. She said that in the IO market "spreads widened" which contributed to the write down. Compared to 2004, Freddie's earnings fell 13%. GSE chairman and CEO Richard Syron called it a "solid year," while president Eugene McQuade noted that the company increased its GSE market share to 45% from 41%. The company will release final 2005 results in late May. Mr. McQuade noted that 5% of Freddie's retained portfolio includes "non-traditional" mortgages, including interest-only loans.