Freddie Mac CEO: Fortunes will improve

Mortgage buyer chief Richard Syron tells shareholders the company's earnings will grow 15% to 20% this year, but not before taking $6 billion hit from bad mortgages.

The second-largest U.S. buyer and backer of home mortgages will be able to emerge from the housing downturn with a robust business, Freddie Mac Chairman and CEO Richard Syron told shareholders at the company's annual meeting in McLean, Va.

Wall Street seemed unconvinced as Freddie Mac shares fell $1.06, or 4.2%, to $24.23 in morning trading. They are down from more than $65 a year ago.

Syron reiterated previous expectations, saying the company expects revenue growth of 15% to 20% this year, but expects to see losses from bad mortgages rise to as much as $6 billion this year.

"Weakening housing prices and housing activity have led to a punishing deterioration of credit which has hurt our results, along with those of other market participants," Syron said.

However, the company is well-suited to ride out the housing bust because the home loans that Freddie Mac holds or guarantees are far less risky than those held by other lenders, he said.

"We know we have to do better - even in the most adverse market environment," Syron said, telling shareholders that executives "will not be satisfied until you have received a fair return for the capital you have invested in the company."

Freddie Mac posted a loss of $3.1 billion last year and lost $151 million in the first quarter of this year.

Its first-quarter losses were better-than-expected, though much of the improvement was due to changed accounting practices.