In September of last year, the government seized control of Fannie Mae and Freddie Mac, two of the largest mortgage finance companies in the country. Together these companies own/guarantee nearly 31 million home loans to the tune of $5.5 trillion. Last week the Obama Administration doubled the lifelines for these finance companies in the amount of $200 billion to ensure that these companies would not fail. Last week, Fannie Mae stated that the company would need $15.2 billion in government aid and Freddie Mac has stated that $35 billion more may be needed on top of the $13.8 billion that it received in 2008!

Fannie Mae's net worth was below zero at the end of the quarter, which prompted this request for first-time government funding. 63,500 of the foreclosed homes last year belonged to Fannie Mae, losing the company close to $59 billion.

The finance company claims that if the recession continues to decline that "more borrowers will be unable to make their monthly mortgage payments, resulting in increased delinquencies and defaults, sharper declines in home prices and higher credit losses."