Its shares fell more than 14 percent before the market open after reporting a net loss of $2 billion, or $3.29 a share, compared with a loss of $715 million, or $1.17 a share, in the year-ago period.
Freddie said it is seriously considering reducing its fourth quarter stock dividend by 50 percent.
Slumping home prices and tighter credit conditions have increased losses at mortgage finance companies such as Freddie Mac and its bigger rival Fannie Mae.
Wall Street analysts, on average, had expected Freddie Mac to report a third quarter loss of $2.16 per share.
More of Freddie Mac's home loans are heading into foreclosure, which has forced the company to increase its provisions for failing loans. Freddie said Tuesday it had put aside $1.2 billion for credit losses and had begun to increase fees for guaranteeing the payment on home loans.
The company said it has hired Goldman Sachs and Lehman Brothers to help it study new ways to raise capital. It also said the fair value of its net assets decreased by about $8.1 billion in the third quarter.
Freddie Mac sharply shrank its holdings of mortgage securities in October, keeping the portfolio below a growth limit set by its regulator, the Office of Federal Housing Enterprise Oversight.
Freddie Mac's retained mortgage portfolio dropped by an annualized 16.9 percent rate in October to $703.1 billion, after decreasing significantly the previous month.
Freddie Mac shares fell to $32 from Monday's close of $37.50. Through Monday's close, shares of Freddie Mac are down about 45 percent year to date, in line with the drop in the KBW Mortgage Finance Index over the same period.
(Reporting by Patrick Rucker; Editing by Chizu Nomiyama)