Freddie Mac Expects 'Significant' Losses From Bankrupt Firm
DOW JONES NEWSWIRES
Freddie Mac (FRE) said its additional losses related to the bankruptcy of
Taylor, Bean & Whitaker Mortgage Corp. could be "significant."
At the end of September, the giant mortgage lender, which federal regulators
took control of a year ago, estimated its potential exposure related to Taylor
Bean's loan repurchase obligations at $500 million.
Freddie said Monday in a filing with the Securities and Exchange Commission
that it is working with the debtor in possession, the Federal Deposit Insurance
Corp. and other creditors to quantify its other exposures related to Taylor
Bean.
"At this time, Freddie Mac is unable to estimate its total potential exposure
related to TBW's bankruptcy; however, the amount of additional losses related to
such exposures could be significant," the filing said.
Taylor Bean filed for bankruptcy protection in late August after receiving
notices from Freddie and fellow housing lender Ginnie Mae suspending it as an
issuer of mortgage-backed securities and a mortgage servicer.
Taylor Bean was one of the largest independent home-loan providers before it
closed its mortgage-lending operation.
Freddie also said it recently filed a proof of claim with the FDIC regarding
funds Taylor Bean held as a servicer of loans owned or guaranteed by Freddie in
Colonial Bank, which was placed into receivership by the FDIC in August. The
claim is for a total of $595 million.
Earlier this month, Freddie said it didn't need any additional federal aid for
the second straight quarter as its reported a third-quarter loss of $6.3
billion. But the company is expected to ask for more handouts from the U.S.
Treasury as rising unemployment and falling home prices continue to drive higher
credit-related losses for both Freddie and its larger rival, Fannie Mae (FNM).
Freddie's shares were at $1.15, down 0.9%, in after-hours trading. The stock
has almost tripled in the past year.
-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; Kathy.Shwiff@dowjones.com
(END) Dow Jones Newswires
11-23-091759ET
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