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Updated with afternoon market action and additional information about preferred stock trading patterns.



) -- The intense ride continued for

Fannie Mae


continued on Friday afternoon.

Fannie Mae's common shares were up 4% in afternoon trading to 81 cents, while common shares of its sister company

Freddie Mac


were up 4.5% to 82 cents.

Fannie's common shares on Thursday sank 28%, following a gain of 80% over the previous two trading sessions. Freddie's common shares on Thursday dropped 28% on Thursday, after seeing a gain of 71% over the previous two days.

The action in Fannie Mae's preferred shares remains very strong. For example, Fannie's preferred series E (FNMFM) shares, with a coupon of 5.10% and a par value of $50, rose were over 8% Friday afternoon to $12.25, after a gain of 115% over the previous two trading sessions. The preferred series E shares traded as high as $17 late Thursday morning.

The trading interest in Freddie Mac's preferred shares has been more subdued. For example, Freddie's preferred series Z (FMCKJ) shares, with a coupon of 5.375% and a par value of $25, were down 1% to $3.15 Friday afternoon, after a gain of 5% over the previous two days. Then again, through Thursday's close at $3.20, the Freddie Mac preferred series Z shares were up 52% from a month earlier.

Both mortgage giants were taken under government conservatorship by the Federal Housing Finance Agency in September 2008. At that point, common and preferred shares of Fannie Mae and Freddie Mac were considered worthless by most investors, who saw a very low probability for the government sponsored enterprises to resume operating as private companies, and very little prospect for the payment of dividends on existing preferred stock.

This week's ride for the shares began on Tuesday, when

The Wall Street Journal

brought attention to a March 14 filing, when Fannie Mae said it would delay filing its annual 10-K report to the

Securities and Exchange Commission

. Fannie said it would need extra time to analyze whether or not it could recapture some of its $61.5 billion valuation allowance for deferred tax assets (DTA), as of Sept. 30.

The recapture of Fannie's DTA would provide a major boost to the company's effort to redeem $116.1 billion in preferred stock held by the U.S. Treasury, for bailout assistance since September 2008.

Freddie Mac filed its 10-K on time, saying that the company's DTA valuation allowance was $31.7 billion as of Dec. 31. The government holds $72.2 billion in Freddie Mac preferred shares.

Please see


previous coverage, for much more information on Fannie Mae and Freddie Mac, including:

-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.