Increased Defaults Hit Freddie Mac Income Statement

These are the regular prime mortgages and not those subprime ones.

The $764 million in net income fell sharply from the $1.4 billion last
year.

The company's chief financial officer blamed a rise in mortgage
defaults for the lower earnings. Costs related to current and future failed
loans rocketed 433 percent from a year earlier to $336 million, and rose 74
percent from the first quarter.

Rising loan failures have not yet set off alarms about the quality
of the company's assets, said Jim Vogel, who tracks the company for FTN
Financial in Memphis, Tennessee.

This means things might get alot worse before they start getting better. The bad part is that quite a few adjustable rate mortgages still have the adjust in the coming months. The age of the "House Flipping Wanna-be Robert Kiyosaki" are long gone.