Our two mortgage giants, Freddie Mac and Fannie Mae have been trying to balance their losses and gain profit to counteract the market turmoil. Lack of confidence in them only serves to further batter Wall Street as consumers and investors are closely scrutinizing every move made by Freddie and Fannie to see if there is any hope for the market. Last week Freddie Mac shares fell 50%, since then they have regained 7.4%.

Fannie Mae recently raised $7.4 billion, but Freddie Mac is still taking steps to raise funding. They will be issuing common and preferred stock, and their file for registration was just accepted by the Securities and Exchange Commission. Freddie aims to gain $5.5 billion in capital, but are waiting until their stock is finally registered with the SEC.

The company was previously exempt from the registration as they are defined as a government chartered company. In 2002, they were going to voluntarily register, but due to a scandal in the multiple billion dollar range, the idea was put on hold. As soon as they finished rearranging their financing in light of the scandal, they began registration procedures. As they have just been accepted, they could soon begin issuing new stock. While it is not 100% sure that Freddie will issue the shares, it would be a great way to improve capital ratios. They have stated that the issuance of stock will depend on the market and the shareholders. They did note that, “Issuances of new preferred or common equity may be dilutive to existing stockholders and may carry other terms and conditions that could adversely affect the value of the common or preferred stock held by existing stockholders.”

Freddie is also contemplating limiting or reducing their portfolio, or lowering their quarterly dividend.