Freddie Mac, the stricken American home loans giant, has asked the US Government for $13.8 billion in emergency funds after third quarter losses ballooned in the wake of declining markets and the housing slump.

Freddie Mac is the first institution to go to US authorities for funding in the wake of the Government's decision to scrap its securities buyback plan and instead use the $700 billion Troubled Asset Relief Program (Tarp) to inject capital into America's stricken financial sector.

It is not clear whether the US government will take a stake in Freddie Mac as a condition of the funding.

In September, Freddie Mac and Fannie Mae were moved under the control of the Federal Housing Finance Agency after the US Government was forced to bailout the two groups to the tune of $200 billion.

Allowing either of the two organisations, who are responsible for 40 per cent of America's mortgages, would have caused chaos in global financial markets and rocked the property market to its foundations.

Earlier this week, Fannie Mae said it had not tapped the $200 billion Government fund but warned it may be forced to seek help if trading continues to deteriorate after it announced a record $29 billion loss in the third quarter.

Freddie Mac today announced a net loss of $25.3 billion for the three months to the end of September, compared to a $1.2 billion deficit in the same period last year.

The Virginia-based company, under new chief executive David Moffett, blamed fresh write-downs against bad mortgage loans and other credit related expenses for the losses. It also took a $14.3 billion charge related to its deferred tax credits.

Freddie Mac said it was forced to seek the Government funds because of the losses and expects to receive them by the end of the month.

Freddie Mac's equity is now worth minus $13.8 billion. Henry Paulson, the US Treasury Secretary has pledged to invest up to $100 billion in each company in order to maintain stability in the housing market.

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