WASHINGTON (AP) - Shares of Fannie Mae and Freddie Mac fell yesterday amid continuing fears the mortgage finance companies will be forced to sell more new shares than anticipated to compensate for losses from the housing slump.

The two government-chartered companies have been operating under a cloud of uncertainty in recent weeks, and their shares plunged on Monday to levels not seen since the early 1990s amid concerns an accounting rule change would force them to raise as much as $75 billion in new capital.

While those concerns subsided on Tuesday amid reassurances from the companies' chief government regulator, fears remain that housing troubles will continue to worsen, forcing Fannie and Freddie to sell so many shares that existing investors would see the value of their existing stake decline.

"There's a lot of nervousness about whether or not they have adequate capital to withstand the credit crisis," said Fox-Pitt Kelton analyst Howard Shapiro, adding that he is "pretty comfortable" in the companies' planned and completed capital-raising efforts.

Freddie Mac shares fell $1.53, or 11.4 percent, to $11.93 in trading yesterday afternoon, while shares of Fannie Mae fell $1.05, or six percent, to $16.57.

While the government is widely expected to stand behind Fannie and Freddie's debt should the companies be unable to meet their obligations, analysts say shareholders could be wiped out in the event of a severe crisis.

Investors are finally realising that the housing market's troubles are not confined to sub-prime loans made to borrowers with poor credit and will increasingly affect loans bought or guaranteed by Fannie and Freddie, said Joshua Rosner, managing director of research firm Graham, Fisher & Co.

"There's an increasing recognition that as they have to raise capital, investors are going to be diluted," Mr. Rosner said.

For traders - known as short-sellers - who make bets that Fannie and Freddie's share prices will fall, fears about the companies' capital-raising plans become a self-fulfilling prophecy because that process gets more expensive as a company's share price drops, noted Frederick Cannon, an analyst with Keefe, Bruyette & Woods Inc.

"If shorting the stock works, it works better all the time," he said.

Washington-based Fannie Mae raised more than $7 billion earlier this year to fortify its balance sheet. McLean, Virginia-based Freddie Mac plans to raise $5.5 billion, but has been waiting to initiate the offerings because its stock is not yet registered with the Securities and Exchange Commission (SEC).

The company had been exempted from SEC registration due to its status as a government-chartered company. Freddie had proposed to register with the SEC in 2002, but that process was put on hold due to a multi-billion-dollar accounting scandal that came to light in 2003.