NEW YORK — Freddie Mac on Friday disclosed that the government will seek $30 billion to $35 billion in additional funding from the U.S. Treasury to offset projected losses in its mortgage portfolio.

This would be the second time the mortgage finance giant has tapped the $100 billion credit line the Treasury established when the government took over Freddie and its sibling, Fannie Mae, last September.

The mortgage company drew $13.8 billion in the third quarter, meaning that it is on track to tap nearly half of the line of credit in less than five months after it was offered.

"They are going through the $100 billion pretty fast, and the next couple of quarters aren't going to be pretty either," said Rajiv Setia, agency debt strategist with Barclays Capital. This could mean that the backstop of $100 billion may not be enough.

In a filing with the Securities and Exchange Commission late Friday, Freddie said it arrived at the estimate for new funds after a preliminary analysis of its fourth-quarter financial statements. That process isn't complete and could ultimately result in a materially different amount being sought.

Setia, though, doesn't expect the amount to change significantly.

"It's a pretty accurate markdown of prices on their mortgage assets," Setia said. "Freddie has a lot of commercial mortgage bonds on its portfolio, and I assume the bulk of markdowns come from there."

In addition, Freddie has also been marking down its subprime and Alt-A portfolios.

The terms of the Fannie and Freddie lines of credit requires Treasury, upon request, to provide funds after any quarter in which the company reports negative net worth. The funds are to be sought by the agencies' conservator, the Federal Housing Finance Agency.

The two companies will enjoy the conservatorship only until the end of 2009. Outgoing Treasury Secretary Henry Paulson recommended that the two be shrunk to much smaller organizations that would operate with a business model similar to public utilities. While it's uncertain what course the companies would take, their existing financial troubles are a cause of much concern.

Also in Friday's filing, Freddie Mac said it has reached a settlement that will allow JPMorgan Chase & Co. to become the servicer for mortgages previously serviced by Washington Mutual Bank.

Under the terms of the agreement, JPMorgan Chase will assume Washington Mutual's obligations to repurchase mortgages that were sold to Freddie Mac with recourse.

Regarding mortgages sold to Freddie Mac without recourse, JPMorgan Chase agreed to make a one-time payment to Freddie Mac for obligations to repurchase mortgages "that are inconsistent with certain representations and warranties made at the time of sale."

Freddie Mac didn't disclose the financial terms of the settlement. Freddie and Fannie Mae were nationalized in September on market worries that the two mortgage giants didn't have enough capital to see them through the housing crisis.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.