Freddie Mac big June bond buyer but capital eyed

By Lynn Adler

NEW YORK (Reuters) - Freddie Mac's (FRE.N: Quote, Profile, Research, Stock Buzz) ability to support the troubled U.S. housing market is intact, June data from the second-largest U.S. home funding company showed on Friday, as it bought billions of dollars in mortgages in a market reeling from foreclosures and falling prices.

Late payments on bonds Freddie Mac owns or guarantees kept climbing, however, threatening to eat into its capital and inhibit its buying power just as the U.S. Senate prepares to vote on emergency funding plans for the company and its larger counterpart, Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz).

Concern persists about whether the two federally chartered, shareholder-owned companies have sufficient capital to keep buying mortgages at a robust clip as losses mount from rising loan delinquencies.

"Freddie Mac said it had decent forward commitments" in June to purchase mortgage bonds, "but beyond that it's uncertain what they're going to do," said Walter Schmidt, manager of mortgage products and strategy at FTN Financial in Chicago.

"It remains to be seen how much they can support the market going forward," he added.

These worries drove shares of the two largest U.S. home finance sources to 17-year lows this month before they turned higher on a government rescue plan. The bill has been passed by the U.S. House of Representatives and is now being considered by the Senate, with passage expected on Saturday.

Freddie Mac's stock fell more 7 percent to $8.18 on the New York Stock Exchange, while the company's debt was closely tracking or slightly underperforming Treasuries on Friday.

The bill opens the door for relatively low-cost loans and share purchases from the government if either company needs.