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Freddie's CEO, Richard Syron, said the government-sponsored company could lose an additional $5.5 billion to $7.5 billion over the next few years from soured home loans.
"I honestly think it's going to get tougher before it gets better," Syron said in a discussion with financial analysts in New York. His company has already logged about $4.5 billion in projected losses during the first nine months of this year.
Freddie's shares fell $3.73, or 10.6 percent, to $31.31.
Fannie CEO Daniel Mudd, also meeting with analysts at the conference, forecast "a very tough 2008" and continued weakness in home prices through 2009. Mudd called the wave of defaults and foreclosures this year the worst mortgage crisis "in recent memory."
The Washington-based company, which lost $1.4 billion in the third quarter, sold $7 billion in preferred stock last week to raise capital to stabilize its finances. Mudd said yesterday that Fannie had no further plans for such sales.
Mudd said the company could raise additional capital, however, through sales of mortgage investment holdings and increased fees on mortgages.
Syron said while the mortgage crisis has brought a rising wave of foreclosure notices into public view, less evident have been "pictures of people standing with furniture on the lawn" after being evicted from their homes. "As that begins to happen, and it will happen, I am afraid of the impact that this has."
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source: boston.com
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