By Al Yoon

NEW YORK, Feb 25 (Reuters) - Investors fear Fannie Mae and Freddie Mac will report another quarter of losses this week, making it difficult for the two biggest U.S. home financing companies to help rescue the housing market.

It has become clear to Wall Street analysts that the housing finance companies have not adapted to the rising number of U.S. mortgage defaults and the slump in house prices, even though regulators are turning to them to help stop foreclosures, boost refinancing, and recharge the mortgage securities market.

Brokerage downgrades of Fannie Mae (FNM.N: Quote, Profile, Research) and Freddie Mac (FRE.N: Quote, Profile, Research) are piling up among Wall Street analysts, with Fannie Mae forecast to report a fourth quarter loss of $1.8 billion on Wednesday, and Freddie Mac seen losing $2.1 billion when it reports on Thursday.

"They are just going to be very messy numbers" from the government-sponsored enterprises (GSE's) when they report their results, said Paul Miller, an analyst at Friedman Billings Ramsey in Arlington, Virginia.

Last November Fannie Mae "said things had not changed so far that quarter, and things got worse. And its even worse now" in 2008, Miller added.

The two companies were once-reliable profit generators with share prices trading well-above $60, but have turned into huge loss-makers that now trade under $30 since their stocks tumbled sharply last October.

Miller on Monday slashed his rating on Fannie Mae to "underperform" from "market perform." Earlier on Monday, analysts at Goldman Sachs Group Inc. cut Fannie Mae and Freddie Mac shares to a "sell" rating, citing credit losses and losses from interest-rate volatility.

Merrill Lynch & Co.'s Kenneth Bruce on Friday also told its clients to sell shares of the companies, noting that earnings could languish for years.