Freddie posts 4th straight qtrly loss, slashes dividend

By Al Yoon

NEW YORK (Reuters) - Freddie Mac on Wednesday posted its fourth straight quarterly loss as it braced for a prolonged housing crisis by setting aside twice as much money for bad loans and plans to slash its dividend by at least 80 percent.

The worse-than-expected results came just three weeks after authorities orchestrated a sweeping effort to prop up the U.S. No. 2 provider of residential mortgage funding and its rival Fannie Mae (FNM.N: Quote, Profile, Research).

Freddie Mac's chief financial officer Buddy Piszel reiterated that the company's has adequate capital, and said the company can wait for "choppy" market conditions to improve before raising capital, which could exceed $5.5 billion.

For the second quarter, McLean, Virginia-based Freddie posted a loss of $821 million, or $1.63 per share, compared with a profit of $729 million, or 96 cents per share, in the same quarter a year earlier.

That included the first loss from its holdings of subprime and other risky loans, which formed a significant part of its $2.8 billion in realized and anticipated losses stemming from the steepest U.S. housing downturn since the Great Depression.

The company more than doubled its provisions for loan losses to $2.5 billion since the first quarter, marking the fourth increase in as many quarters. All credit-related expenses surged to $2.8 billion from $1.4 billion in the previous period and $463 million a year earlier.

"Credit-related expenses were far higher than what guidance had been," said Rajiv Setia, a strategist at Barclays Capital in New York. Barclays was expecting about $2 billion, he said, adding "that was on the high side" of analyst estimates.