Fannie and Freddie are required by their government regulator to have a financial cushion - cash or securities to fall back on. With losses rising, that cushion has been dwindling. That has forced them to raise new money during a time where it has been expensive and difficult to do so.

Most of the mortgages Fannie and Freddie insure or own are traditional, prime mortgages that are among the safest in the market. The pair backed very few of the exotic subprime mortgages that have caused the most problems over the past year.