Conservatorship has been good for Fannie Mae and Freddie Mac, but the companies continue to drain federal resources away from other government operations, according to the regulator of the mortgage giants. In its third annual letter to Congress, the Federal Housing Finance Agency said stronger loan underwriting standards enabled the companies to narrow losses in 2010 to $28 billion from $93.6 billion a year earlier. The companies have received more than $160 billion funding from the Treasury Department the past few years. “Since being placed under conservatorship in 2008, Fannie Mae and Freddie Mac remain critical supervisory concerns,” said Edward DeMarco, acting director of the FHFA. This is a “result of continuing credit losses in 2010 from loans originated during 2005 through 2007 as well as forecasted losses from loans originated during that time.” Still, DeMarco said governmental control allowed the companies to “accomplish their statutory mission of facilitating stability and liquidity for single-family and multifamily housing finance.” The FHFA said Fannie and Freddie remain plagued by “credit risk, operational risk, modeling risks and retention of qualified leadership and personnel.” The companies hold a 60% share of single-family loan production. As conservator, the FHFA is tasked with minimizing credit losses at the GSEs, and DeMarco said more stringent underwriting standards and a stronger price structure have helped. “Although past business decisions leading to these losses cannot be undone, each enterprise, under the oversight and guidance of FHFA as conservator and regulator, has improved underwriting standards for loan purchases in the past two years.,” he said. “Another way FHFA minimized losses was to require the enterprises to enforce existing contractual representation and warranty loan repurchase agreements with lenders.” The FHFA also oversees the dozen Federal Home Loan Banks and said all 12 reported profits in 2010. Loans to the banks dropped to $479 billion last year from $631 billion at the end 2009. The regulator said the banks’ financial condition and performance stabilized in 2010, but several continue “to be negatively affected by their exposure to private-label mortgage-backed securities.” Write to Jason Philyaw.