Freddie Mac takes step toward issuing stock

Apart from issuing new stock, Freddie said it is considering limiting growth in its portfolio, or reducing the size of the portfolio and lowering its quarterly dividend.

Freddie noted in the filing that managing regulatory capital "may be adversely affected by mortgage and stock market conditions and volatility."

Freddie added that a stock offering could hinge on current market conditions and be dilutive to current shareholders.

"Our ability to issue additional preferred or common stock will depend, in part, on market conditions, and we may not be able to raise additional capital when needed," Freddie said in the regulatory filing. "Issuances of new preferred or common equity may be dilutive to existing stockholders and may carry other terms and conditions that could adversely affect the value of the common or preferred stock held by existing stockholders."

Shares of Freddie plunged nearly 50 percent last week amid speculation the government might step in and take control of the company, which some investors believed could wipe out equity shareholders' positions even if the company continued to operate. Shares have recovered 7.4 percent since the beginning of this week.

On Sunday, Freddie and Fannie received pledges of support from the federal government. The Treasury Department unveiled a plan to help provide larger credit lines for the nation's two largest purchasers of mortgage debt. The Treasury will also ask Congress to allow it to purchase equity stakes in the pair if necessary.

The Federal Reserve said it would open a special lending option to Freddie and Fannie to provide further lending support.

Fannie and Freddie hold or back $5.3 trillion of mortgage debt, about half the outstanding mortgages in the United States.

Analysts widely agree the sustainability of Freddie and Fannie is vital to helping prevent the already battered real estate market from getting worse.

Shares of Freddie rose 85 cents, or 10.2 percent, to finish at $9.18 in Friday trading. Fannie shares rose $2.47, or 22.6 percent, to $13.40.