Freddie asks to tap rescue fund

Freddie Mac is asking for an initial injection of $13.8 billion in government aid after posting a massive quarterly loss Friday.

The mortgage firm is making the first request to tap the $200 billion promised by the Treasury Department to keep it and sibling company Fannie Mae afloat after the two were seized by federal regulators in September. Freddie Mac said it expected to receive the money by Nov. 29.

The McLean, Va.-based company posted a loss of $25.3 billion, or $19.44 a share, for the third quarter. The results compare with a loss of $1.2 billion, or $2.07, a year earlier.

Analysts are divided about whether Fannie’s and Freddie’s losses will exceed the government’s $200-billion pledge.

“There is no way that $200 billion will be sufficient, especially as these companies are called on to, frankly, take losses . . . for the good of society,” said Josh Rosner, managing director of research firm Graham, Fisher & Co.

Others say it’s unlikely that losses will soar so high. “I find it difficult to be believe that it will get that far,” said Credit Suisse interest rate strategist Ira Jersey.

Ever since the government takeover, Fannie Mae’s and Freddie Mac’s debt has suffered from a lack of confidence among international bond investors. They are concerned about whether the U.S. government firmly stands behind the companies’ debt.

Once the government actually injects money, that could help resolve that uncertainty, said Alex Pollock, a fellow at the American Enterprise Institute in Washington.

Fannie and Freddie own or guarantee about half of U.S. mortgage loans. If the companies can pay a reduced premium for their debt sales, that could translate into lower mortgage rates for U.S. homeowners.

Freddie Mac’s third-quarter loss was mainly due to a $14.3-billion charge to reduce the value of tax assets but also was driven by a $9.1-billion write-down on mortgage securities and $6 billion in credit losses from soaring mortgage delinquency rates and foreclosures.