Dallas, Texas 10/29/2013 (Financialstrend) – Federal Home Loan Mortgage Corp (OTCBB:FMCC) stock jumped close to 12% during trading on October 25. The stock did not experience this dramatic increase in its market value alone. Its cousin entity Federal National Mortgage Association (OTCBB:FNMA) too posted a 13% increase in value over the same time period. The trigger for this exaggerated bull run by the two stock is related to the partial conclusion of a legal battle the two federally backed loan providers had been waging with Bank of America. On October 23, the judge who heard the case ruled that Bank of America was at fault. In the ruling, the judge has pinned blame on Countrywide which is a unit of Bank of America of defrauding Freddie Mac by dumping its caustic mortgage notes and in turn caused huge losses. The judge would be setting the punitive fines at a later date and would mark the formal closure of the case. The qualified witness based on whose testimony the court has indicted Bank of America had pegged losses at $800 odd million to the two mortgage companies.
On the back of the judgment details becoming public on October 23, the stock of Freddie Mac posted a 19.4% appreciation in its market value.
As of close of business on October 25, the share of Freddie Mac was trading at $2.07 per share which indicates a 58.6% dip from its 52 week high price mark. In related news investors in the Freddie Mac stock would be fretting about the potential cap on lending that the federal housing finance agency has decided to impose on both Federal Home Loan Mortgage Corp (OTCBB:FMCC) and Federal National Mortgage Association (OTCBB: FNMA).These new ceilings are expected to come into effect over the next six months. Long term investors of the stock would be hoping that the loan size cap would not be detrimental to Freddie Mac business.
