Freddie Posts $2 Billion Loss; Will Raise Capital

Stung by declining home values and subprime delinquencies, Congressionally chartered mortgage giant Freddie Mac posted a $2 billion loss in the third quarter, noting that it may raise additional capital in "the very near term" so it can meet a 30% minimum capital standard. Early Tuesday morning it was unclear how much of its 3Q loss is directly tied to markdowns on the value of its $120 billion subprime portfolio. It experienced GAAP mark-to-market losses of $3.6 billion in the quarter, which includes $2.3 billion in credit items and $1.5 billion in interest-rate items. "Weakening house prices and deteriorating credit have hurt Freddie Mac's results, as well as those of other participants in the mortgage market," said Buddy Piszel, chief financial officer. "You can see the impact of these trends in our credit results and throughout our financial statements. Year-to-date, we have recognized $4.6 billion in net credit-related items on a pre-tax basis."