Credit market trouble struck again on Tuesday as Freddie Mac, the second largest U.S. mortgage finance company reported a big loss of more than $2 billion for its latest quarter, prompting the firm to say that it may cut its dividend investors.

Freddie, a Government Sponsored Enterprise, saw investors sell off its shares, which plunged $10.76, or 28.69 percent to close at $26.74 on the New York Stock Exchange. Freddie's shares have fallen more than 60 percent this year.

The company said falling home prices and more difficult credit conditions were to blame for more borrowers defaulting on their loans.

The net loss was $2.0 billion, or $3.29 per share, compared with a loss of $715 million a year ago, or $1.17 per share.

Freddie's Chief Executive Richard Syron told analysts in a conference call the company also expects its fourth quarter to be difficult. He added that the company would shortly announce how it would increase capital, including the chance that it could cut shareholder dividends by half.

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