Freddie Mac, one of the nation’s largest investors in residential mortgages, reported a $211 million dollar net loss for its first quarter on Thursday. The losses are equilivant to an estimated $0.46 per diluted common share, as compared to a net income of $2.80, or $2.0 billion total, for the first quarter of 2006. The company also said credit-related expenses soared, reaching $193 million in the first quarter of 2007, compared to $60 million in the first quarter of 2006.

According to an acticle on www.freddiemac.com, the drop in net income was attributed to mark-to-market losses on the company’s derivatives portfolio and credit spread widening due to: – Fair value, before capital transactions, decreased by approximately $300 million, primarily due to credit spread widening. – Guarantee portfolio volumes showed strong growth, up 16 percent, and retained portfolio grew 6 percent, both on an annualized basis. – Company resumes quarterly reporting with release of first quarter 2007 financial results.
“While significant mark-to-market losses on our portfolio of derivatives, which are used to hedge our interest-rate risk, and on our credit guarantee activities have resulted in a GAAP loss, we remain encouraged with the underlying fundamentals of Freddie Mac’s business,” said Buddy Piszal, chief financial officer.
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