Mortgage giant Freddie Mac is considering raising capital by selling as much as $10 billion in new shares to investors, Reuters reports.
The main buyers for any new-stock issues are likely to be existing shareholders worldwide. A definitive plan has not yet been determined.
Shares of Freddie Mac and Fannie Mae, the two pillars of the US housing market, have taken a beating this year as the companies face mounting losses due to delinquent borrowers, rising foreclosures and pressure to increase their exposure to the mortgage market as a way of stabilizing housing.
The US Treasury and Federal Reserve have announced a plan to shore up Freddie Mac and Fannie Mae balance sheets and borrowing capabilities, and helped shore up investor confidence.
Together, the companies own or guarantee more than $5 trillion in US mortgages. They have lost more than $11 billion since June, and have predicted more losses to come.