FREDDIE MAC

As Fannie Mae prepares for further drops in housing and credit markets, the company said on Tuesday it will cut its dividends by 30 percent and sell $7 billion of preferred stocks to increase capital.

Stocks rose on Friday on a report the U.S. Treasury will soon unveil a plan to help stem the subprime mortgage crisis and on comments by Fed chief Ben Bernanke that added to expectations of an interest-rate cut.

Shares of Freddie Mac surged on Wednesday as strong demand for a record preferred stock issue signaled the second-biggest provider of U.S. home funding could access capital even in turbulent markets.

US stocks were nearly flat in Mid-day trading on Monday, recovering after earlier losses following continued concerns over a weakening credit market and a worsening subprime mortgage situation.

Freddie Mac's credit losses may surpass its historic high, if the U.S. mortgage market deteriorates more than what is forecast by the No. 2 mortgage finance company, Moody's Investors Service said.

Shares of Freddie Mac fell as much as 9.5 percent on Wednesday after analysts slashed their price targets on the stock, saying an unexpectedly wide third-quarter loss may make it tough for the No. 2 U.S. home funding company to inject the liquidity needed to rescue an ailing housing market.

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 Mac, the second-largest U.S. mortgage finance company, on Tuesday posted a wider third-quarter loss and said it may slash its dividend and raise new capital as it works through what it called an extremely difficult year for housing and credit markets.

The dollar dropped to a record low versus the euro on Tuesday, amid worries that credit-market turmoil will result in slower economic growth and lower interest rates from the Federal Reserve.

Freddie Mac, the second-largest U.S. mortgage finance company, on Tuesday posted a wider third-quarter loss and missed analysts' estimates as a jump in failing loans forced it to set aside $1.2 billion. Its shares fell more than 14 percent before the market open after reporting a net loss of $2 billion, or $3.29 a share, compared with a loss of $715 million, or $1.17 a share, in the year-ago period.

Stock index futures trimmed gains and were well off their session highs on Tuesday after Freddie Mac, the No. 2 U.S. mortgage finance company, posted a wider third-quarter loss.

Stocks slid on Monday as a brokerage downgrade of Citigroup Inc sparked a sell-off in financial services companies on concerns about credit losses and the housing slump. Goldman Sachs cut Citigroup to sell and said the bank may have to write off $15 billion over the next two quarters as mortgage losses reduce earnings.

Fannie Mae said it will hold a conference call on Friday to answer accounting questions, after Fortune magazine reported that the U.S. mortgage lender may be camouflaging credit losses.

HSBC Holdings, Plc, the largest european bank, said Thursday that it was stopping all sales and trades of mortgage-backed securities as a result of closing its U.S. mortgage desk, according to reports.

New York Attorney General Andrew Cuomo issued subpoenas to mortgage financiers Fannie Mae and Freddie Mac on Wednesday as he seeks information about allegations that Washington Mutual Inc pressured appraisers to inflate home values.

Stocks fell on Wednesday as fear of more credit market turmoil raised worry about prospects for the economy and profits. New York Attorney General Andrew Cuomo said his office was sending subpoenas to government-sponsored mortgage financiers Fannie Mae and Freddie Mac as part of a probe of the home loan industry.

New York Attorney General Andrew Cuomo announced on Wednesday that his office was sending subpoenas to Fannie Mae and Freddie Mac as part of his expanding probe of the home mortgage industry. The subpoenas seek information on the mortgage loans that the two companies purchased from banks, including Washington Mutual, Cuomo said.

New York Attorney General Andrew Cuomo is expected to announce on Wednesday he is examining what role Fannie Mae and Freddie Mac might have played in an alleged scheme to inflate appraisals of home values, sources familiar with the investigation said.

Former Freddie Mac chief executive Leland Brendsel will return or waive rights to more than $15 million in compensation, according to terms of a settlement related to accounting fraud at the company between 1998 and 2002.

A Federal Reserve interest rate cut this week won't be enough to save the reeling housing sector, overwhelmed by unsold homes.

Freddie Mac sharply shrank its holdings of mortgage securities in September and kept the portfolio below a growth limit set by its regulator, the second largest U.S. home funding company said on Wednesday.