Citing accounting associated with derivatives it used to hedge its operations, Freddie Mac announced a loss of hundreds of millions of dollars in the third quarter of 2015 Nov. 4.

According to the announcement, the government-sponsored enterprise that shares the secondary mortgage market with Fannie Mae lost a net $475 million in the third quarter. That compared to a net income of $4.2 billion in the previous quarter.

"For the first time in four years, Freddie Mac had a net loss in the most recent quarter," Freddie Mac CEO Donald Layton said. "This $0.5 billion loss was caused mainly by the accounting associated with our use of derivatives, whereby the derivatives are marked to market but many of the assets and liabilities being hedged are not. The resulting difference between GAAP reporting and the actual underlying economics, which has created significant GAAP income volatility in our quarterly financial statements, reduced the after tax earnings in the quarter by an estimated $1.5 billion as interest rates declined significantly."