NEW YORK — Freddie Mac on Wednesday posted a second-quarter loss that was more than three times larger than Wall Street expected, leading stunned investors to send Freddie’s stock down more than 19 percent to $6.49.
Freddie is now reeling from loans — made in 2006 and 2007 as the market turned sour — to borrowers with solid credit but little proof of their incomes, or small or no down payments.
These so-called Alt-A loans make up about 10 percent of Freddie’s portfolio but accounted for more than half of the company’s credit losses in the quarter.
Freddie lost $821 million for the quarter that ended June 30, compared with a profit of $729 million for the same period last year.
The dismal financial results come just weeks after the government threw a financial lifeline to Freddie and its sister company, Fannie Mae, to ward off fears that they could collapse and take down the U.S. mortgage market. The two hold or guarantee nearly half of outstanding U.S. mortgage debt.
Freddie said it expects to cut its dividend this quarter to 5 cents or less a share from 25 cents.
