On Thursday, Fannie Mae announced that they were going to have to ask for funding from the Treasury Department, as their 2008 losses amount to $58.7 billion. In return for giving preferred shares to the government, they would like to take out $15.2 billion from the $200 billion federal credit line they have with the Treasury Department.

They had reported their fourth quarter loss to be $25.2 billion, which amounted to about $4.47 per share. This was their 6^th straight quarter of losses. Fannie blames the losses on the increased amount of loan defaults from borrowers. Their credit losses and additional expenses due to property foreclosures was at $12 billion for their quarter, more then a 30% increase from the prior quarter. Their noncollectable loans were at $7 billion for 2008, up 219%. With non performing loans, their year total was $119.2 billion, having been at $27.2 billion in 2007.

Fannie will need at least $16 billion to cover these 4^th quarter losses, and Freddie is expected to ask for $35 billion more, on top of the $14 billion they have already removed. For both companies, their liabilities currently exceed their assets putting them at a negative net worth. Both companies´s net worths are suffering; guaranteeing mortgages is becoming more expensive in this troubled market. Investors want higher rates to overcome their fear of the market and entering into a losing deal. Obama had recognized this issue and to assist them, had doubled their federal lifelines to $200 billion and will now allow each company to have $900 billion in loans within their portfolio, a $50 billion increase.