Freddie Mac sued over mortgage problems: law firm

NEW YORK (Reuters) - A law firm said it had filed a suit against Freddie Mac on Wednesday alleging the No. 2 home funding company did not take adequate steps to protect itself from problems in the mortgage industry.

The complaint alleges that Freddie Mac and certain of its officers did not adequately implement risk-control measures to protect the company from acquiring billions of dollars worth of mortgages with poor underwriting standards, law firm Coughlin Stoia Geller Rudman & Robbins LLP said in a statement.

The suit, which was filed in U.S. District Court in Manhattan, seeks to represent purchasers of Freddie Mac shares between August 1, 2006 and November 19, 2007, the firm said.

Government-sponsored enterprises Fannie Mae, the largest home funding company, and Freddie Mac have been hit by mounting losses as home foreclosures continue to climb and the credit crisis drains the value of mortgages they own.

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.

(Reporting by Paritosh Bansal; Editing by Gary Hill)