Freddie Mac seeks $6.1 billion capital after loss

By Al Yoon

NEW YORK (Reuters) - Freddie Mac (FRE.P), the second largest provider of funding for U.S. residential mortgages, on Tuesday said it needs $6.1 billion from the Treasury after falling home prices and delinquent loans fueled its seventh consecutive quarterly loss.

Freddie Mac said its loss ballooned to $9.9 billion in the first quarter from a $151 million deficit a year earlier, though the loss shrank from a $23.9 billion hole at the end of 2008.

Freddie Mac's loss follows a $23.2 billion first-quarter deficit at larger rival Fannie Mae, which needs $19 billion in capital from the Treasury.

Freddie Mac's first-quarter loss came as eroding home prices and the economic recession forced it to ramp up its provision for credit losses to $8.8 billion, from $7 billion in the fourth quarter, the company said. Total credit expenses rose to $9.1 billion from $7.2 billion, due to rising expenses of managing properties owned through foreclosure

Freddie Mac said its regulator had made the capital request -- its third in as many quarters -- from Treasury, which agreed when seizing the company and Fannie Mae in September to inject money via senior preferred stock purchases.

The new capital would raise the aggregate amount of Freddie Mac's draw on Treasury to $51.7 billion. That amounts to a quarter of the total $200 billion pledged by the government to support the company, which was forced into a conservatorship in September to ensure it will continue to support the housing market in a time of distress.

The McLean, Virginia-based company and Fannie Mae (FNM.P) are crucial cogs to the nation's housing system, providing a market for loans that lenders originate. They buy mortgages for their $1.7 trillion in debt-financed portfolios or guarantee loans packaged into mortgage-backed securities.

But they misjudged the downturn, the worst since the 1930s, sending them into the arms of the government, which has since also rescued banks, insurance companies and auto makers.