PREVIEW-Hints of Fannie and Freddie roles sought in filings

By Al Yoon

NEW YORK, Nov 6 (Reuters) - Equity investors burned by the government seizure of Fannie Mae and Freddie Mac in September may soon get clues of how the housing finance giants may be remaking themselves under conservatorship.

Fannie Mae (FNM.P) and Freddie Mac (FRE.N) will file reports in coming days outlining third-quarter results, which analysts expect to show fifth consecutive quarterly losses on the back of deferred tax asset write-downs that could total a combined $39 billion.

With shares of the companies trading below $1, the focus for investors is shifting from future profitability to how the government will control the companies known for a decade of reliable profit as the housing market boomed. Also watched will be whether another jump in foreclosure-related credit costs is enough to force capital injections by the U.S. Treasury.

Philosophically, a bigger question for investors is how much the regulator will push Fannie Mae and Freddie Mac to stabilize the ailing housing market, regardless of the cost. The regulator can exercise more control than ever over the "missions" of the government-sponsored enterprises, raising doubts the companies could act in the name of shareholders.

Bond investors also want to know the degree of government support to the companies, which were taken into conservatorship to prevent a dangerous erosion in capital they need in their roles as the top providers of funding for U.S. home loans.

"We think the uncertainty surrounding the conservatorship could represent a credit cliff," said Victoria Wagner, an analyst at Standard & Poor's in New York. Concerns are "what their legal status could be, when the conservatorships will end and how they are managed under the conservatorship," she said.

For now, even the riskier subordinated debt of Fannie Mae and Freddie Mac enjoys "explicit support" of the government, S&P said on Wednesday as it upgraded the debt rating.

Fannie Mae and Freddie Mac spokesmen declined to specify dates of their Securities and Exchange Commission filings, but they are expected before the Nov. 10 deadline.

Expected write-downs of deferred tax assets -- or credits used to offset future income taxes -- at Fannie Mae and Freddie Mac will be big drag on third quarter results, and an admission of sorts that a weightier public policy role is trumping profitability under the conservator, Wagner said.

It's likely "they will very much be run with a public policy focus," she said.

For the second quarter, Fannie Mae and Freddie Mac relied on forecasts for future earnings to justify $20.6 billion and $18.4 billion in deferred tax assets, respectively, which bolstered capital. Fannie Mae's notice last month of pending third quarter write-downs could be interpreted as a reversal of those profit expectations, Wagner said.

Blows to stockholders' equity could trigger the U.S. Treasury's commitment to maintain positive net worths for the GSEs, and put capital injections in motion.

Fees on the GSE's mortgage bond businesses are another clue on larger public policy roles.

In normal times, the companies can protect profit by boosting fees on loans they guarantee. But with housing still reeling, government officials are pulling out the stops with emergency programs to encourage lending. Lower fees would make it easier for borrowers to refinance or get a new loan.

The GSEs have already been shouldering more responsibility for housing over the last year as the credit crunch froze other lending programs, including Wall Street securitizations. Owning or guaranteeing nearly half of all U.S. residential mortgages, they have a unique view on the market that drives investment decisions elsewhere.