Freddie Mac asks for more US aid

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US mortgage giant Freddie Mac saw a loss of $9.9bn (£6.5bn) in the first three months of 2009 and said it would ask for a further $6.1bn in state aid.

The request for more federal help is the firm's third since it was taken over by regulators in September, taking its aid total to about $51bn.

Soaring levels of missed mortgage payments and falling home prices had led to soaring losses, it said.

Along with Fannie Mae, the firm holds more than half of US mortgages.

Defaults

In February, President Barack Obama doubled Treasury funding to Freddie Mac and Fannie Mae to $200bn each as part of his plan to tackle the housing crisis.

FREDDIE MAC & FANNIE MAE Buy mortgages from approved lenders and then sell them on to investors - rather than lending directly to borrowersGuarantee or own around half of the $12 trillion US mortgage marketAre relied on by almost all US mortgage lendersSupply funds to meet consumer demand for mortgagesLink mortgage lenders with investors - keeping the supply of money widely available and at a lower costHave no direct UK equivalent <a class="" href="/1/hi/business/7502310.stm">Q&A: Freddie Mac and Fannie Mae</a> <a class="" href="/1/hi/business/7505152.stm">The importance of Freddie and Fannie </a>

Freddie Mac's latest bail-out takes the total for both companies to about $85bn from the potential $400bn government lifeline.

The White House budget office estimates that rescuing the two firms will reach $173bn, but observers say that prediction may be optimistic.

Freddie Mac said it helped around 40,000 borrowers stay in their homes in the first quarter, through refinancing and loan modification programs.

And its quarterly loss was much smaller than the $23bn posted by Fannie Mae between January and March.

The role of the two firms in the mortgage market is to buy loans from banks and sell them to investors.

Both hit trouble during the real estate boom, making higher risk loans which are not being repaid.

The recession is also resulting in reliable homeowners with good credit defaulting on payments.