FANNIE MAE

Shares of Countrywide Financial Corp dropped as much as 7 percent on Monday after analysts slashed earnings estimates for the largest U.S. mortgage lender and a report showed existing home sales fell.

Fannie Mae's mortgage portfolio swelled in July, when the largest U.S. home funding company bought up cheap mortgage-backed debt, leaving it scant room to grow under current limits set by its regulator.

The U.S. mortgage and credit crisis deepened on Wednesday, as Accredited Home Lenders Holding Co, HSBC Holdings Plc and Lehman Brothers Holdings Inc announced a total of 3,400 job cuts, as concern mounted about the longer-term impact on the economy.

The Federal Reserve's attempts to provide liquidity in the past few days are not reaching the players who need it since they cannot borrow directly from the central bank, leaving the $7.2 trillion U.S. mortgage bond market struggling to clear the volumes being offered.

Tightening global credit markets have taken a toll on U.S. mortgage-backed securities issued by Fannie Mae and Freddie Mac and it will take more than recent Federal Reserve measures to boost liquidity.

U.S. Treasury Secretary Henry Paulson said on Tuesday he was talking with housing finance giants Fannie Mae and Freddie Mac about policy options to ease strains in mortgage markets, including possible legislation that could expand their mortgage investment options.

Senate Finance Committee Chairman Christopher Dodd on Tuesday said he asked the Bush administration to lift the portfolio caps on housing finance giants Fannie Mae and Freddie Mac, but Treasury Secretary Henry Paulson expressed reluctance to do so.

Fannie Mae, the nation's largest source of home loan funding, increased its holdings of risky subprime loans in 2006 while its profits fell that year, the company said on Thursday in a long-delayed report.

The U.S. mortgage meltdown has crushed dozens of lenders and is causing severe liquidity problems at the largest, Countrywide Financial Corp.

Countrywide Financial Corp., the largest U.S. mortgage lender, said on Thursday it drew down an entire $11.5 billion bank credit line as a global credit crisis limits its access to short-term cash.

The head of Freddie Mac, one of the biggest U.S. mortgage finance companies, dismissed suggestions that his company should step in to bolster sagging financial markets by buying distressed loans, the New York Times reported on Saturday.

A number of U.S. states are setting up funds to help homeowners with risky subprime mortgages refinance to more affordable loans in a bid to slow the rate of home foreclosures, The Wall Street Journal reported on its Web site.

Despite slow sales in the past four years, Americans believe their homes are worth more now than a year ago.

New Century Financial Corp. (OTC: NEWC) one of the largest companies offering subprime loans, disclosed Tuesday that it will no longer be allowed to sell mortgage loans directly to Fannie Mae or act as the primary servicer of any mortgage loans for the financier.