By Lynn Adler

NEW YORK (Reuters) - Demand for debt sold by mortgage finance company Freddie Mac weakened on Monday while a prominent analyst estimated Freddie and Fannie Mae, the largest U.S. home funding sources, each need to raise up to $15 billion in fresh capital.

But in Washington, the stalemate over legislation aimed at stabilizing the worst U.S. housing market since the Great Depression may be loosening.

The White House on Monday said it hoped for movement on housing legislation being negotiated with Congress by the end of this week, although President George W. Bush would veto a bill if it included $4 billion in grants that would let local communities buy foreclosed homes.

Treasury Secretary Henry Paulson said he felt certain that Congress would pass the plan, which includes a safety net for Fannie Mae and Freddie Mac.

"I am quite confident that we will get the sort of program that we need," Paulson told CNBC cable television in an interview.

Despite the poor showing for Freddie's (FRE.N: Quote, Profile, Research) debt sale, it may be premature to read too much into the weaker demand for the $3 billion in bills given that share prices of both Fannie and Freddie soared last week, an analyst said.

Freddie Mac shares fell 4.7 percent on Monday, while Fannie Mae (FNM.N: Quote, Profile, Research) shares gained 5.5 percent, after recently hitting 17-year lows.

Better-than-expected results from Bank of America Corp (BAC.N: Quote, Profile, Research), the latest in a series of positive surprises from a few big banks, suggested the sector may be stabilizing and drove up financial shares on Monday.