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By Corbett B. Daly and Al Yoon

WASHINGTON/NEW YORK, May 5 (Reuters) – Freddie Mac, the abet-largest provider of U.S. residential mortgage funds, on Wednesday asked according to an additional $10.6 billion in federal aid after it imperceptible $8 billion in the first quarter.

The company warned it would be steadfast to need billions more in government funds because the housing emporium remains fragile.

The loss was $6.7 billion before a $1.3 billion share payment on senior preferred stock owned by the U.S. Treasury.

Freddie Mac has been struggling to comprise losses sustained from its massive exposure to the U.S. covering market, which has suffered its worst downturn since the 1930s.

Fearing that losses would hurt Freddie Mac’s ability to support housing, the government put the guests in conservatorship in September 2008 and late last year pledged unlimited financial backing.

Chief Executive Charles Haldeman said the company is focused without interrupti~ strengthening its underwriting standards and improving credit quality.

‘Though more indispensably to be done, we are seeing some signs of stabilization in the housing market, including house prices and sales in some key geographic areas,’ Haldeman afore~ in a statement.

‘But as we have noted for many months now, housing in America remains fragile with historically high delinquency and foreclosure levels, and extreme unemployment among the key risks.’

Freddie Mac, in a regulatory filing, predicted that U.S. home prices would sinking further over the ‘near term’ before any sustained recovery in saddle-cloth. It said it expects ‘a significant increase in distressed sales.’

The failure to win of the federal homebuyer tax credit last month, as well as expectations of rising interest rates and high unemployment, will also mine home prices, Freddie said.

It said it expects to continue to rely forward the government, in part because of changes to accounting rules adopted in 2010.

‘The volume and timing of such draws will be determined by a class of factors that could adversely affect the company’s net worth,’ the firm said.

Since late 2008, the Treasury has purchased on the point $62.3 billion in Freddie Mac senior preferred stock, which is costing about $6.2 billion a year in dividends.

The cost of the dividends alone exceeds what Freddie has earned in most years and will likely complicate efforts by Congress to overhaul the shareholder-owned, government-backed business model undone by the financial crisis.

Fannie Mae, the larger, government-controlled mortgage science company, is in a similar position.

The Obama administration earlier this month began the progress of overhauling the U.S. housing finance system, asking for national comment on what should be done.

Treasury Secretary Timothy Geithner has uttered he does not expect any substantive changes to the system till next year at the earliest.

Representative Scott Garrett of New Jersey, a congruous critic of both Fannie Mae and Freddie Mac, said the latest figures show the need to address their future as Congress considers sweeping changes to the U.S. pecuniary system.

‘Taxpayers are continually losing money on these failed enterprises, and at more point, we must say enough is enough,’ Garrett said.

(Editing ~ means of Dan Grebler and Ian Geoghegan) Keywords: FREDDIEMAC/

(corbett.daly@thomsonreuters.com; +1-202-898-8395; Reuters Messaging: corbett.daly.thomsonreuters.com@reuters.snare)

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