Fannie Mae and Freddie Mac, along with the Department of Housing and Urban Development, will provide more than $25 billion to the government's $75 billion loan modification program - with the Obama administration announcing that it would use only $50 billion from the $700 billion financial bailout package for funding the program.

While the more than $20 billion that Fannie and Freddie will contribute to the program will mainly go towards subsidizing interest rates, and providing incentives to mortgage-investors, loan-servicers, and borrowers to prompt loan modifications; the funding by HUD will be utilized in special credit counseling programs for those severely in debt.

The administration's decision to draw on Fannie and Freddie implies that starting April 1, the companies would raise their obligatory fees and harden credit score and down payment rules. The new rules entail that even applicants with seemingly good FICO scores will have to make a 30 percent or higher down payment to avoid higher charges.

The higher fees will probably help Fannie and Freddie offset the elevated risks and losses related to some particular loan products, buyer equity stakes and credit scores. With plunging home values, the losses for the companies rise monstrously when loans go to foreclosure.

According to Freddie spokesman Brad German, the proposed higher charges are based on the likelihood of higher losses, as the companies "have to manage risks appropriately."