Freddie Mac Files With SEC To Register Its Shares

July 18, 2008 2:44 p.m. EST

New York, NY (AHN) - The troubled firm, Freddie Mac, after deciding to sell its new shares to investors, filed its application to register the U.S. Securities and Exchange Commission on Friday. The second-largest U.S. mortgage-finance provider is likely to raise as much as $10 billion by selling shares, avoiding a costly and controversial bailout from the government.

Last week, shares of the government-chartered mortgage firms, Fannie Mae and Freddie Mac, plunged reports that the companies are likely to raise more capital.

The two largest U.S. providers of financing for home loans had tumbled as the market analysts are concerned over reports that banks may unload more mortgage bonds.

U.S. Treasury Secretary Henry Paulson had emphasized the important role of government-sponsored enterprises Fannie Mae and Freddie Mac in raising capital for financing houses.

Both of them also defended Fannie Mae and the McLean, Virginia-based Freddie Mac by stating that they are "adequately capitalized."

"They play an important role in our housing markets today and need to continue to play an important role in the future," Paulson said.

Over the last 12 months, the shares of the government-chartered, publicly traded companies have incurred more than 80 percent of losses.

Fannie Mae and Freddie Mac, which support $5 trillion in home loans, were trading at about $60 a year ago.

For the shares this year, Fannie is down 67 percent and Freddie 77 percent.

Registering with SEC on Friday is the final step for Freddie to get approval on its common stock with the agency, following which the company has promised to raise $5.5 billion in fresh capital.

Shares of Freddie Mac increased by $1.44 or 17 percent to $9.77 around noon in New York Stock Exchange composite trading. While, Fannie Mae gained by as much as $2.78 or 25 percent to $13.71.