Mortgage News

The unsurprising news that Freddie Mac lost money for the fourth straight quarter was also accompanied by more bad news for Freddie's stock holders. The divided was cut from 25¢/share to 5¢/share. The surprising news is that they're still getting a dividend at all. One would think that when you're bleeding red all over the place, you'd be looking to cut costs, including dividends. In theory, a dividend is a share of profits. So why pay dividends when you're losing money?

Clearly, the reason has to be that Freddie's board of directors is terrified that if they eliminate the dividend the stock's price will plummet even lower than it already has. That's a dangerous game to play in the long run, particularly for a debt-laden organization.