As previously reported President Obama will be relying on Fannie Mae and Freddie Mac to pull the nation out of its housing market crisis. The director of the Federal Housing Financial Agency, James Lockhart, supported this saying, "The Obama administration has indicated that Fannie and Freddie will continue having a key role in the nation's economy as we go forward,...At this point, our primary focus has to be getting through the present crisis."

Together, the two giants account for over 75% of our nation´s mortgage originations, and own/guarantee around 35 million mortgages, that total $5.3 trillion. While they account for the majority of the nation´s financial backing, they too are deeply struggling. Last September, they were taken over by the government and each company was given a $100 billion lifeline to keep them afloat.

With Obama´s foreclosure prevention plan, Fannie and Freddie will provide those borrowers with little to no equity in their homes with low-cost refinancing. This is estimated to assist up to 5 million borrowers with avoiding foreclosure. Also, as a part of Obama´s $75 billion loan modification plan, the two companies will also provide over $20 billion to subsidize interest rate reductions of struggling borrowers. This move is expected to prevent an additional 4 million foreclosures.

Of course, these actions while helping foreclosure, could prevent a back draft so to speak as Fannie and Freddie are still struggling. Both firms are facing huge portfolio defaults and will most likely be reporting huge losses, Fannie will be giving their report on Monday and Freddie in March. Fannie has already acknowledged needing up to $16 billion to take care of their 4th quarter losses and Freddie is looking at an additional $35 billion, besides the $14 billion they have already been issued. In all, they may need over $200 billion each in government funding, more so as they hold $1.6 trillion in subprime and Alt-A loans.  However, there is little doubt that the government will deny their funding. James Angel, an associate professor at the McDonough School of Business at Georgetown University, agreed stating "The government wants Fannie and Freddie to help people buy houses,...They don't want there to be any limit." The government has also agreed to up the amount of mortgages they can guarantee, from $850 billion to $900 billion.