Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) both trade at near 52-week lows. They have been taken down by large writes-offs in their mortgage portfolios. Now the question is whether they will have to raise billions of dollars in capital the way that firms like Citigroup (NYSE: C) have.

Putting money into the companies would benefit the housing and financial markets. According to The Wall Street Journal: "Of course, raising that much fresh capital could have benefits if it allows the companies to continue acting as a backstop for the troubled housing market."

But investors owning common stock may not come off as well. Freddie Mac has a market cap of $12 billion. If the company has to raise $10 billion to offset losses, shares could drop from their current level of just over $20 to under $12. If the mortgage markets get much worse going into the second half of the year, there is not guarantee that they won't have to go back to the markets again.

With a $22 billion market cap, Fannie Mae is a bit better off.

With both stocks already down around 70%, the market can't be thinking that the news ahead is good.

Douglas A. McIntyre is an editor at 247wallst.com.

Will new capital at Freddie Mac (FRE) and Fannie Mae (FNM) whip out shareholders? originally appeared on BloggingStocks on Wed, 12 Mar 2008 08:40:00 EST. Please see our terms for use of feeds.