Freddie Mac today posted its fourth consecutive quarterly loss, set plans to slash its common stock dividend and warned of more difficulty ahead amid the steepest US housing market slump since the Great Depression.
The second-biggest provider of US residential mortgage funding also affirmed a commitment to raise $5.5 billion in additional capital, but it provided no immediate details of its plan. It repeated that it continues to maintain a surplus over all regulatory capital requirements.
For the second quarter, McLean, Virginia-based Freddie Mac reported a loss of $821 million, or $1.63 cents per share, compared with a profit of $729 million, or 96 cents per share, a year earlier. It follows a $151 million loss in the first quarter and brings its cumulative loss over the past four quarters to more than $4.6 billion.
"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 of new capital and will evaluate raising capital beyond this amount depending on our needs and as market conditions mandate."
Freddie Mac and rival Fannie Mae faced a storm of stock selling last month as investors speculated the companies would fall short of the capital needed to offset losses sustained from delinquent mortgages.
The turmoil led US Treasury Secretary Henry Paulson, in concert with US Federal Reserve Chairman Ben Bernanke, to arrange emergency measures that bolstered government backing for the companies.
To help preserve capital, Freddie said it would slash its quarterly dividend, pending board approval, by 80 per cent to 5 cents a share from 25 cents a share.
The companies own or guarantee more than $5 trillion in mortgages, or nearly half of all US home loans.
Freddie said revenue rose by more than 10 per cent from the first quarter to $1.69 billion, including a increase of 92 per cent in net interest income to $1.5 billion.
Total credit losses, meanwhile, rose to $810 million from $528 million in the first quarter.