It should come at no surprise that Fannie Mae (NYSE:FNM) has been loosing money, but just how much remains uncertain. The company's shares plummeted yesterday after it announced that it was cutting its quarterly dividend by 30 percent and raising $7 billion in new preferred securities after a strong reception to its previous offerings. Many investors are hunting for a bottom in this stock that has dropped nearly 50% during the past year.

Fannie Mae also announced today that it was expected to take credit losses of 8 to 10 basis points in 2008, compared to 4 to 6 basis points in 2007. The company said that 60% of its "seriously delinquent" loans have credit enhancement, based on the unpaid principal balance of the loans. The company also took the time to explain that the $7 billion offer yesterday will provide the company with a "capital cushion" over regulatory requirements in a "difficult market" and take advantage of select business growth opportunities.

The mortgage markets themselves remain in serious trouble as a significant number of subprime loans are expected to reset over the next 18 months. Many more near-prime loans are expected to do the same through 2010. It is important to note that all of these resets could cause further defaults, which could increase the number of homes on the market and lower prices. These lower prices then decrease the home equity the people rely on so much in the United States.

In the end, this problem is far from over and Fannie Mae may face further downside before it sees any significant upside. Regardless, this is definitely a stock to watch as once a bottom does it, there will be a great opportunity for profit!

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