The two biggest U.S. home loan finance companies, Fannie Mae and Freddie Mac announced that they would suspend foreclosures of occupied homes until early 2009, as the government moves to stem the tide of home losses plaguing the economy.

Regulators and lawmakers have leaned harder on the two companies to help stabilize the crumbling U.S. housing market since they own or control about half of residential mortgages outstanding.

The government effectively seized Fannie Mae and Freddie Mac in a conservatorship in September amid concerns that steep mortgage losses were hurting their ability to remain viable and thus backstop the mortgage market.

The move by the two government-sponsored enterprises comes a week after their regulator unveiled a plan that could cut payments for hundreds of thousands of borrowers by easing terms on their loans. Homeowners facing foreclosure who are spending more than 38 percent of their income on mortgage payments could have payments reduced by the companies, under the program. Loan modifications by lenders have increased but so far failed to stop record increases in foreclosures.

The foreclosure moratorium also appears to lend credence to speculation the government is pushing the companies to operate more in a public policy role, perhaps at the expense of profit. That has some investors concerned since the government has not defined the roles of the shareholder-owned companies after the conservatorships are lifted.