Mortgage Foreclosure & Refinance Resource

Scott Reimer, shareholder has filed a lawsuit against Freddie Mac, its CEO and others on Wednesday, alleging the No. 2 U.S. home funding company did not take adequate steps to protect itself from problems in the mortgage industry. In the complaint filed in U.S. District Court in Manhattan Reimer accuses Freddie Mac, CEO Richard Syron and other executives of not adequately implement risk control measures to protect the company from acquiring billions of dollars worth of mortgages with poor underwriting standards.

The suit, which asks for class action status, seeks to represents purchasers of Freddie Mac shares between Aug. 1, 2006 and Nov. 19, 2007.  On Tuesday, Freddie Mac reported a $2 billion net loss for the third quarter and said it might slash dividends by 50 percent or use other means to boost its capital as the downturn in the housing market worsens

Freddie Mac’s loss of $2 billion, or $3.29 per share, was much worse compared with a loss of $715 million, or $1.17 per share, in the quarter a year earlier. The company cited “increased credit-related expenses and losses on mark-to-market items” for the decline, which was larger than analysts’ estimates.

The company said that its core capital was just $600 million above the regulatory minimum, and as a result it would need to consider “very near-term capital-raising alternatives.”