Fannie Mae, the state-owned US mortgage giant, today announced a record $29 billion loss during the third quarter and admitted it will be forced to tap a $100 billion rescue fund if the market continues to deteriorate.

The company which, along with Freddie Mac, is responsible for 40 per cent of America’s mortgages, announced that losses in the three months to September 30 swelled due to a £21.4 billion write down on the value of its assets.

Fannie Mae also ran up $9.2 billion in losses on foreclosures, as increasing numbers of cash-strapped Americans defaulted on their mortgage payments.

The company is operating under the control of the Federal Housing Finance Agency after the US Government was forced to bailout Fannie Mae and Freddie Mac to the tune of $200 billion in September.

A collapse of Fannie Mae and Freddie Mac could have caused catastrophe in both the US and global financial markets since both companies were responsible for $5,500 billion worth of mortgages.

Fannie Mae said today that it had not yet withdrawn any funds from the Government. However, it said it would be forced to tap the $100 billion facility if “current trends in the housing and financial markets continue to worsen and we have a significant net loss ion the fourth quarter of quarter of 2008”.

The company is operating under new chief executive, Herbert Allison, who is expected to continue to use more conservative accounting policies for measuring the group’s assets and to make further large write-downs

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