June 20 (Bloomberg) -- Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, may post further losses in the second quarter as the housing market deteriorates, Lehman Brothers Holdings Inc. said.

Lehman changed its forecasts for operating losses for Fannie Mae to $1.20 a share from 68 cents, and lowered its projected loss for Freddie Mac to 55 cents a share from 40 cents, according to report today.

``The housing market continues to deteriorate at an accelerating pace, with national home prices already down 4 percent from the peak'' and ``expected to fall even farther than we believed to 20 percent from the peak,'' New York-based analysts Bruce W. Harting and Mark C. DeVries wrote in the note.

The companies, which own or guarantee almost half the $12 trillion of U.S. home and apartment-building debt, have posted three straight quarterly losses totaling $7.1 billion at Fannie Mae and $4.6 billion at Freddie Mac. Banks repossessed twice as many homes in May and foreclosure filings rose 48 percent from a year ago as falling house prices trapped borrowers in mortgages they couldn't afford, RealtyTrac Inc. said last week.

Analysts at UBS AG said today raised their expectations for a 2008 operating loss at Fannie Mae to $3.75 a share from 25 cents. UBS cut its share price estimate on Fannie Mae to $26 from $33.

Fannie Mae dropped $1.19, or 4.7 percent, to $23.81 today in New York Stock Exchange composite trading. Freddie Mac fell $1.83, or 7.7 percent, to $21.82. Both stocks are down more than 64 percent in the past year.

Fannie Mae and Freddie Mac were created by Congress to increase mortgage financing and provide market stability. The companies, which own or guarantee almost half of the $12 trillion in U.S. residential mortgage debt, profit by holding mortgage assets that yield more than their debt costs, and from fees charged to guarantee bonds they create.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

Last Updated: June 20, 2008 16:19 EDT