Shares drop on Freddie Mac losses

By MoneyhighStreet Staff. Published on August 6, 2008 This post currently has no comments.

Shares in the government-chartered mortgage lender Freddie Mac fell 11.69 percent to $7.10 Wednesday after the company''s second quarter losses outstripped Wall Street forecasts.

The news saw the company''s shares become the most active stock on the New York Stock Exchange (NYSE), with over 65 million shares traded during the day.

According to Forbes, the company''s losses for the three months to June were $821 million - or $1.63 per share - compared to a profit of $729 million recorded in the same period a year before.

The Associated Press (AP) said the company''s per share losses were approximately three times bigger than Wall Street forecasts.

The fallout from the news also hit shares in Freddie Mac''s sister company, Fannie Mae, which had fallen 7.79 percent in recent trading on the NYSE.

Investors are said to be concerned over the future of the mortgage lenders, which together back around half of all mortgage debt in the US, in light of the country''s sub-prime loans crisis and falling property values.

Overall, declining stocks outnumbered advancing shares on the NYSE by a ratio of three-to-two, the AP added.