"We have seen a ton of foreclosures, but we have not seen a lot of pictures of people standing in front of their house with their furniture on the front lawn saying, 'What am I going to do?'" Chief Executive Officer Richard Syron said.
"As that starts to happen, and it will happen, I am afraid of the impact that this has," he told investors at the Goldman Sachs Financial Services CEO Conference 2007 in New York.
Public concern over the housing market could be the tipping point, dramatically cutting consumer spending and sinking the economy, he said.
"Household wealth in housing is about $21 trillion," he said. "It does not take a big shift in consumer confidence, in consumers worrying about things, for it to have an effect on the economy."
Freddie Mac, officially the Federal Home Loan Mortgage Corp., expects $10 billion to $12 billion in credit losses on its mortgage book, he said.
The No. 2 buyer and guarantor of U.S. home loans joins a string of banks that have admitted unexpectedly high losses in the subprime mortgage financial crisis.