WASHINGTON — The chief executives of Fannie Mae and Freddie Mac on Tuesday warned that their ailing mortgage-finance companies will suffer further in 2008 because of a weakening housing market and rising home-loan defaults.
Freddie’s CEO, Richard Syron, said the government-sponsored company could lose an additional $5.5 billion to $7.5 billion over the next few years from soured home loans.
“I honestly think it’s going to get tougher before it gets better,” Syron said in a discussion with financial analysts in New York. His company has already logged about $4.5 billion in projected losses during the first nine months of this year.
Freddie’s shares fell $3.73, or 10.6 percent, to finish at $31.31 in trading Tuesday.
Fannie CEO Daniel Mudd, also meeting with analysts at the conference, forecast “a very tough 2008” and continued weakness in home prices through 2009. Mudd called the wave of defaults and foreclosures this year the worst mortgage crisis “in recent memory.” The Washington-based company, which lost $1.4 billion in the third quarter, sold $7 billion in preferred stock last week to raise capital to stabilize its finances.
