Freddie Mac’s disastrous third quarter
In more bad news for the housing industry, the massive Congressionally chartered provider of home loans, Freddie Mac, last week reported that it lost $2 billion in the third quarter of 2007.
Richard Syron, Freddie Mac’s chairman and chief executive officer, said that weakening housing prices and deteriorating credit hurt his company’s third-quarter performance. In a press release that you can read here, Syron said that the mortgage industry’s shift toward fixed-rate loans and improved credit and pricing standards will help boost Freddie Mac’s performance in the future.
The loss at Freddie Mac is just more proof that the mortgage industry went a bit crazy during the housing boom. Lenders gave too much money to too many people with bad credit histories. The repercussions of this financial irresponsibility are still hitting the housing industry.
When will the housing industry stabilize? That’s hard to say. But if Syron’s statements are any indication, it will take well into 2008 before the housing industry regains at least most of its former strength.
