After two weeks that saw investor concerns over dual housing finance giants Fannie Mae (FNM) and Freddie Mac (FRE) veer wildly from serial dilution to outright insolvency, and shares in both quasi-governmental firms punished to historic lows as a result, both companies started out Monday strongly, continuing a rebound that began on Friday. Fannie Mae was trading at $15.70, up 17.16 percent, while Freddie was trading at $9.72, up 5.9 percent, when this story was published. Freddie's long-awaited filing with the Securities and Exchange Commission on Friday served to cool some investor nerves in the equity and debt markets, as it puts the company in a situation to offer shares in the private market and suggested that the company wasn't likely to go after any direct investment from the federal government. Fannie CEO Daniel Mudd went on the NewsHour with Jim Lehrer late last week as well, reiterating that the GSE he helms wouldn't be looking to tap into government assistance any time soon. "Fannie Mae has never taken a penny from the federal government," Mudd said. "I don't think we're ever going to get there." That's not to say that either GSE isn't likely to need additional capital to help push through a housing mess that Mudd suggested is still far from over. "We’re going through a very tough market," he said. "Everybody knows that the housing market has been down for a period of time. We expect it to bounce around the bottom for a while longer before it starts to recover, so we need to be ready for that." But how much is enough? Paul Miller, an analyst at Friedman Billings Ramsey, said Monday that he estimates that each GSE will need another $10 billion to $15 billion each to weather the storm and continue purchasing mortgages. "The best solution for everyone is for the GSEs to raise fresh equity to strengthen their balance sheets and continue to buy mortgages in order to stabilize the housing markets," he wrote, according to a report by Reuters. "We believe most investors are valuing the GSEs on future earnings potential in 2010 to 2011, but, in our opinion, this is a risky investment policy, and there are too many unknowns with credit losses and possible future capital raises." Debate over mortgage purchases In the meantime, plenty of financial ink has been spilled in recent days over Freddie Mac's registration statement, which suggested that it may slow the purchase of mortgages or cut its dividend in a move to shore up capital. A story co-authored by Bloomberg's Jody Shenn is generating discussion in industry circles, although our market sources suggest that concern is being overstated. The Bloomberg story raised the specter that Freddie may reel in from its high-level of purchase activity, putting more of the hurt on borrowers that are already finding available mortgage credit hard to come by. Freddie's retained portfolio hit a record high of $770.4 billion during May of this year. "This just means much less credit availability for mortgage borrowers,'' the story quotes Paul Colonna, chief investment officer for fixed income at GE Asset Management, as saying. "They were teed up to be saviors of the mortgage crisis, but now they've got their own capital issues." Most of HW's sources aren't buying the alarm; the options laid out the SEC filing, after all, merely echo what was already said in a Freddie press statement on July 11. "Why is this news now, when it wasn't then?" asked one source, a banking executive that asked not to be named in the story. "Anyone who has followed the GSEs for some time knows what their options are, and they went so far as to outline them in a press statement a week ago. Yet the same discussion in an SEC filing is somehow newsworthy?" Disclosure: The author was long FRE and held no other positions of relevance when this story was written, although indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.