The government has already transfused $137.5 billion into Fannie Mae and its cousin,Freddie Mac, since seizing the two mortgage financing giants in August 2008. The money covers losses on mortgages that the companies bought or guaranteed during the housing boom, allowing them to continue buying new loans.
Democrats want to defer an overhaul of federal housing policy until next year, after the midterm elections. But Republicans have seized on the continuing losses to argue that a plan for the two companies should be a priority of the current legislation.
It is an argument that Democrats have struggled to deflect. “I think it’s a fair claim to make to say we haven’t done enough to address Fannie and Freddie,” Senator Mark Warner, Democrat of Virginia, said in an interview on CNBC Monday. “It is the big elephant in the room.”
Mr. Warner then reiterated his party’s position that that it would be better to return to the issue next year “in a more thoughtful way.”
Republicans, meanwhile, tied up debate on the financial bill last week with speeches in favor of an amendment proposed by Senator John McCain of Arizona requiring the government to sever ties with the companies within five years. Fannie and Freddie would then be left to fend for themselves as private companies.
“The time has come to end Fannie Mae and Freddie Mac’s taxpayer-backed slush fund and require them to operate on a level playing field,” Mr. McCain said.
Fannie Mae and Freddie Mac were created by Congress to reduce the cost of home ownership. The companies buy mortgage loans from banks and other lenders, freeing up money for another round of loans. By providing a guaranteed return, the companies also allow lenders to charge lower interest rates.
During the housing boom, the companies used their profits to build portfolios of investments in high-risk mortgage loans, which are now losing value.
Fannie Mae said Monday that it lost $11.5 billion in the first quarter compared with a loss of $23.2 billion a year ago.
The company essentially became the world’s largest investor in mortgage loans, and its losses reflect the vast numbers of Americans who continue to default.
One consequence is that Fannie Mae now owns real estate worth $11.4 billion. The company said it acquired 61,929 single-family homes in the first quarter alone.
Freddie Mac said last week that it lost $8 billion in the first quarter. It asked for another $10.6 billion in federal assistance.
For now, the quarterly requests are a formality. The Obama administration committed late last year to cover all losses by the two companies through 2012, replacing an earlier promise to cover losses up to $400 billion over that same period.
The total losses are not expected to cross that threshold, but the companies’ prospects remain grim. Both said in first-quarter filings that they could not foresee any reasonable prospect of a return to profitability.
At the same time, the companies have become more important to the health of the housing market as private sources of mortgage funding evaporated almost completely during the financial crisis. Those sources have yet to make a significant comeback.
The government directly or indirectly provided financing for 96.5 percent of mortgage loans in the first quarter, according to the trade publication Inside Mortgage Finance.
Representative Barney Frank, Democrat of Massachusetts, argued in a memo to other leading Democrats last week that it was important to distinguish between the companies’ past mistakes and their present contributions to the health of the housing market.
While the losses that they are experiencing on old loans are unavoidable, Mr. Frank said the companies already had tightened lending standards to reduce future defaults.
“This is an important point that has to be repeated — as Fannie and Freddie operate today, going forward, there is no loss,” Mr. Frank wrote. “The losses are the losses that occurred before we took the first step towards reforming them — we the Democrats — and nothing we could do today will diminish those losses.”
Peter J. Wallison, a fellow in financial policy at the American Enterprise Institute, said it was true that the government could do nothing to stem the losses in the short term, but that it was a mistake not to decide the companies’ future as soon as possible.
“Right now we have a consensus that something needs to be done,” Mr. Wallison said. “The sensible thing to do is to put Congress in a position where they have to act within a certain period of time.”
Pushing the debate into the future, he said, created the risk that Congress would pass the present bill, congratulate itself on addressing the financial crisis, and lose its appetite for the difficult question of what do about Fannie and Freddie.