Financial Winners & Losers: Lehman

Financial stocks continued to slip Tuesday, as Lehman Brothers(LEH Quote) continued to suffer from negative sentiment.

JPMorgan analyst Kenneth Worthington cut his earnings estimates for Lehman through 2009, saying he expects $4 billion in writedowns in the third quarter. The investment bank is reportedly shopping its Neuberger Berman asset management unit, but Worthington does not think a sale is likely. Lehman has been under pressure all year as it struggles to overcome losses related to the credit market and mortgage market meltdown. The stock slumped 13.1% to $13.07.

The NYSE Financial Sector Index declined 151.71 to 6,032.53 in recent trading.

In day three of its most recent losing streak, Freddie Mac(FRE Quote) tumbled 6.4% to $4.11. Freddie issued more five-year notes, but the cost was 113 basis points over Treasuries and more than the previous issuance. As the costs rise, investors have become increasingly worried over the fate of Freddie and fellow government-sponsored mortgage giant Fannie Mae (FNM Quote). Fannie shares slid 4.1% to $5.90.

One big loser for the day was Sallie Mae(SLM Quote), which gave back 16% to $12.99. The student lender has lost almost half its value since June, as the market worries about students returning to college with fewer lending options.

Fellow student lender First Marblehead(FMD Quote) dropped 26.3% to $3.79. On Monday, it announced that Goldman Sachs(GS Quote) had completed a transaction that resulted in a cash infusion for the company. But it quickly shook off that positive news and continued to sell off.

July housing starts fell 11% to their lowest level in 17 years, the Commerce Department reported Tuesday. Mortgage insurers like Radian(RDN Quote) plunged 15.3% to $3.99, while MGIC(MTG Quote) fell 12.6% to $7.15.