Troubled mortgage finance giant Freddie Mac on Wednesday reported a market-shocking loss in the second quarter as the US housing slump deepened and slashed its dividend at least 80 percent.
   
Freddie Mac said it had a second-quarter net loss of 821 million dollars, with the loss per share at 1.63 dollars, more than triple most analysts' forecasts of 53 cents per share.
   
The government-chartered, shareholder-owned firm said the financial results were severely impacted by a 2.5 billion dollar charge for credit losses from rising delinquencies, foreclosures and falling home prices.
   
Freddie Mac and Fannie Mae, both government-sponsored enterprises (GSEs), underpin some five trillion dollars in mortgages, roughly half of the US market.
   
The two GSEs have been under pressure since the housing market collapsed in early 2006 after several boom years of easy credit and speculation that fed off the American dream of home ownership.
   
As their plunging shares raised questions of solvency, the federal government recently offered a lifeline that could cost 25 billion dollars over the 2009-2010 fiscal period, according to the Congressional Budget Office.
   
"It has been more than a year since the housing market went on a tumultuous skid. Yet, the hangover from bad lending practices and tighter credit has housing's two primary sponsors, Fannie Mae and Freddie Mac, still unable to step in and fully provide support," said Jeffrey Ham, an analyst at Briefing.com
   
Around 1420 GMT, shares in Freddie Mac nose-dived 13.56 percent to 6.95 dollars in a broadly lower market. Fannie Mae was off 11.47 percent at 12.04.
   
"Given the likelihood of a prolonged housing slump and the uncertainty of government support, investors should remain extremely cautious of lenders like Freddie Mac or Fannie Mae," Ham said.
   
Freddie Mac's second-quarter results showed rapidly deepening troubles for the mortgage finance giant amid the worst housing slump in decades. In the first quarter the firm posted a net loss of 151 million dollars and took a charge of 1.2 billion dollars for credit losses.
   
The company reaffirmed its commitment to raise capital. In July it announced plans to raise 5.5 billion dollars through a new share offering.
   
"While we expect continued housing and economic weakness will affect our overall performance this year, we continue to maintain a surplus over all regulatory capital requirements," chairman and chief executive Richard Syron said in a statement.
   
"We remain committed to raising 5.5 billion dollars of new capital and will evaluate raising capital beyond this amount depending on our needs and as market conditions mandate."
   
Freddie Mac also said it wanted to slash its dividend in the third quarter by at least 80 percent, subject to approval by the board of directors. The plan would cut the dividend from 25 cents to five cents or less per share.
   
The Federal Home Loan Mortgage Corp., known as Freddie Mac, insisted its "liquidity position remains strong."
   
Moody's credit agency said it continues to review for possible downgrade Freddie Mac's stock and financial strength ratings.
   
"As expected, asset quality continues to deteriorate," Brian Harris, Moody's senior vice president, said.