Freddie Mac reports billions in losses, asks for billions in aid

Freddie Mac recently reported a $6 billion loss for the third quarter of 2011, compared with a $4.1 billion loss in the same quarter of 2010. The government-sponsored mortgage servicer also requested $6 billion in additional aid from the federal government and taxpayers, marking the largest request for aid since April 2010.

The Washington Post reported that Freddie Mac's losses are due to an increase in homeowners paying less interest on their home loans due to refinancing their mortgages, and more mortgage insurers are unable to pay out as much to the lender when homeowners default because they are going bankrupt. In September 2008, the federal government bailed out Freddie Mac and Fannie Mae, and since then, the Federal Housing Finance Agency has controlled the lenders' financial decisions.

While the government-sponsored lenders are struggling financially, the U.S. Treasury Department's Financial Crimes Enforcement Network recently proposed new ideas to help strengthen Fannie Mae and Freddie Mac's process for filing reports of mortgage fraud and other suspicious activity. The proposal aims to make the current process more efficient so reports of potential fraud schemes can be handled promptly and effectively, the Wall Street Journal reported.

Fannie Mae and Freddie Mac will have to develop programs to prevent money laundering and other financial crimes including mortgage fraud, as well as 12 other Federal Home Loan Banks. 

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