Foreclosed homes continue to be part of the operations of mortgage companies Fannie Mae and Freddie Mac. While their finances are being battered by foreclosures, they play big roles in the prevention of more foreclosures.

Fannie Mae had almost $171 billion in delinquent home loans as of the end of June and had allocated $55 billion to cover further home loan losses.

Freddie Mac meanwhile had almost $78 billion in distressed loans and had allocated $25 billion for future home loan losses.

Despite these big losses and big loan loss reserves, Fannie and Freddie have been helping the Obama administration implement its loan modification program to prevent more foreclosures.

Freddie Mac has hired around 600 employees to help modify troubled home loans and monitor the compliance of lenders to the foreclosure prevention program. Fannie Mae meanwhile said it has hired hundreds of additional workers to help carry out the foreclosure prevention program.

Fannie Mae was established in 1938 to help stabilize the mortgage market after the Great Depression. It was later privatized to control budget deficits in the late 1960s. Freddie Mac was created in 1970 to provide competition to Fannie Mae.

The two mortgage entities grew fast in the past decades as they bought home loans from banks, packaged them into securities and then sold them to investors.

When they collapsed last September due to the overwhelming weight of foreclosed homes, the federal government had to save them. Since their rescue, they have used up around $96 billion of taxpayer money allotted to them to prevent the mortgage market from totally collapsing.

As of date, the federal government now controls almost 80 percent of each entity, bearing their increasing problems arising from continued defaults and foreclosures in the housing sector.

Previously, the percentage of borrowers missing their monthly loan payments by three months or more was only 1 percent for both entities. Now the percentage has risen to almost three percent for Freddie Mac and nearly four percent for Fannie Mae.

Barclays Capital predicted that Fannie and Freddie will spend up to $200 billion out of the $400 billion reserved by the government for the two entities.

In the first 6 months of the year, Freddie and Fannie guaranteed almost 70 percent of all mortgages issued nationwide, an increase from 62 percent in 2008 and a significant jump from 33 percent during the boom years when lenders provided loans easily, causing a lot of foreclosed homes.