Last week, Fannie Mae and Freddie Mac reported their earnings for the third quarter, the first quarter since being taken over by the government. The news, as expected, wasn’t pretty. In fact, it was uglier than expected.

Fannie Mae reported a $29 billion loss in the third quarter, driven by a $21.4 billion write-down on tax credits that the agency doesn’t think will be profitable enough to use in the foreseeable future.

Later in the week, Freddie Mac posted its own $25.3 billion loss in the third quarter. In the process, Freddie Mac triggered a $13.8 billion immediate investment from the Treasury Department to buy preferred stock to restore the company’s balance sheet. 

When the companies entered into the conservatorship, the Treasury Department pledged to make $100 billion available to each company should they need an infusion of capital. That $13.8 billion investment in Freddie Mac is just the first installment in a likely series of installments of taxpayer cash into the government-sponsored enterprises. Some analysts are even speculating that the pledged $200 billion in funds won’t be enough to cover future losses.

Fannie Mae has taken over so many foreclosed homes over the last year that if it were a town, it would be bigger than Dayton, Ohio, the company said on a conference call last week. Fannie Mae now owns 67,519 foreclosed properties, and Freddie owns about 28,000.

Fannie Mae’s underwriting continues to grow more conservative. Beginning Nov. 14, Fannie Mae removed the “strong market” designation from its underwriting criteria. That designation listed certain markets, such as Seattle, Los Angeles, and Portland, Ore., where lenders could underwrite conventional deals at a 1.20x debt-service coverage ratio (DSCR), and acquisition loans as low as 1.15x. Now, a 1.25x DSCR is the baseline for all Fannie Mae loans. Fannie Mae also added Las Vegas to its list of “pre-review” markets, where deals are assessed by the company on a case-by-case basis.

Still, Fannie Mae continues to offer 80 percent loan-to-value financing, and its rates are reasonable. Ten-year and seven-year deals were being quoted at around 6 percent to 6.2 percent on Nov. 14, assuming a 10-year Treasury rate of 3.67 percent.