Every month Fannie Mae and Freddie Mac are paying bondholders about $1 billion to cover seriously delinquent homeowners.

Guaranteeing timely payments on MBS and supplying liquidity to the primary mortgage market is the GSEs' main business.

But once a loan has been delinquent for four months Fannie and Freddie can buy it out of the pool and stop advancing unpaid interest to investors.

Ajay Rajadhyaksha, an analyst with Barclays, said the companies should exercise this right a lot more often than they have been. "Every day that passes," he said, "is another day in which wealth is transferred from the U.S. taxpayer" to bondholders.

The problem is that such buyouts would result in staggering hits to the GSEs' capital. Under bondholder agreements, Fannie and Freddie would have to pay 100 cents on the dollar for the loans, but under accounting rules, they would have to then write the mortgages down to their steeply discounted market prices.

The paper losses would in turn force the GSEs to accelerate their draws on the $400 billion backstop the Treasury is providing. Analysts said such a course would run counter to the aspiration that at least some part of the companies emerge from conservatorship intact. Fannie and Freddie declined to discuss the issue.

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