Freddie Mac posts loss as mortgage market soured

(changes headline, adds quotes from chief financial officer, adds byline and details)

By Lynn Adler

NEW YORK, June 14 (Reuters) - Freddie Mac, the No. 2 U.S. mortgage finance company, on Thursday reported an unexpected net loss of $211 million for the first quarter, citing a souring outlook for mortgage credit risk that widened credit spreads.

The loss contrasts with a net gain of $2 billion the company reported for the same period in 2006.

The company reported a net share loss of 46 cents in the first quarter. Excluding unusual items, Freddie Mac was expected to show a profit of $1.09 per share in the first quarter, according to Reuters Estimates.

With this report, Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) resumes quarterly financial reporting for the first time since its 2003 accounting scandal, which led to a $5 billion restatement of past earnings.

The company said mark-to-market losses tied to the wider credit spreads on the mortgages assets in its portfolio was the main driver of the first-quarter loss.

"The volatility in our results will continue," Buddy Piszel, chief financial officer at Freddie Mac, said in an interview. The swings are driven by "the predominant impact of mark-to-market items on both our GAAP and fair value."