Shares in Asia extended losses to fall 1.1 percent on Friday after the newspaper report, which added to worries about the stability of the U.S. financial sector.
Shares of Freddie Mac and Fannie Mae have taken a beating this year as the companies face mounting losses due to delinquent borrowers, rising foreclosures and pressure to increase their exposure to the mortgage market as a way of stabilizing housing.
Shares of Fanne and Freddie surged 18 percent and 22 percent, respectively, on Thursday, after Freddie pulled off its second successful debt sale following the announcement of the U.S. rescue plan.
The shares were also helped by an emergency rule issued on Tuesday by U.S. securities regulators to limit certain types of short selling of shares in major financial companies, including Fannie Mae and Freddie Mac.
While the storm surrounding the companies appears to be easing, they still face mounting losses due to delinquent borrowers, rising foreclosures and pressure to increase their exposure to the mortgage market as a way of stabilizing housing.
Together, the companies own or guarantee more than $5 trillion in U.S. mortgages. They have lost more than $11 billion since June, and have predicted more losses to come.
Even if Freddie and Fannie survive in their current form, it is not clear if they will still be as willing to lend as much to the U.S. housing market as home prices continue to slump. The two companies finance about half of U.S. homes.