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Freddie Mac (NYSE:FRE), a government sponsored enterprise designed to help provide financing in the mortgage market, today reported a massive loss of $2 billion, and says it is having lots of trouble raising capital. The company has signed with both Lehman Brothers (NYSE:LEH) and Goldman Sachs Group (NYSE:GS) for help in raising capital for its business. The firm also reported a staggering $8.1 billion, or 25% drop in the fair value of its assets.

The other government sponsored mortgage firm is Fannie Mae (NYSE:FNM). Fannie Mae reported its earnings back on November 9th, and its earnings release raised lots of questions even at that time. After its earnings release and conference call, many were pointing out what appeared to be "fuzzy math" on the part of Fannie Mae. Fannie had very quietly changed the way it went about reporting bad loans, a move that many believe is just masking over some horrendous credit losses. The financial footing of Fannie Mae could well end up being just as bad, if not worse than Freddie Mac.

What does all of this news mean for the mortgage market and for you? Well for the mortgage market it means that things are getting worse before they get better. It also means that despite what you have heard all throughout the cable news networks, the entire mortgage area is in a lot of trouble, not just the risky subprime mortgages. It seems as if over time the credit mess has spread to the common mortgages. For the individual it means that selling a home could get tougher than ever in the coming months and years.

Freddie Mac and Fannie Mae are different than your normal run of the mill mortgage companies, these are government sponsored enterprises. If these government sponsored enterprises are having so much trouble financially, you have to think there are tons of companies in a whole heck of a lot more trouble than these two are in. Fannie and Freddie were designed to help the credit markets run more smoothly, but now in a strange way are they going to make things worse? It appears that could very well be the case.

What do you think about the mess that is the credit market? How long will it take us to get out of this housing and mortgage mess and will it affect the overall economy substantially?