Shares of Fannie Mae and Freddie Mac were poised to plunge on Friday after The New York Times reported the government is considering taking control of the two mortgage companies.

Senior Bush administration officials told The Times that the government has a plan to place Freddie, (FRE) or Fannie (FNM) or both into a conservatorship if the companies reach insolvency.

Both Freddie and Fannie’s stocks were down more than 50% in pre-market action.

According to The Times, the government would guarantee the any liabilities of the two mortgage companies. However, in a conservatorship. it would make the companies' stock worth effectively nothing.

The White House declined to comment on the Times' story Friday morning.

Freddie and Fannie are government-sponsored mortgage companies which purchase mortgage from banks, package them into securities and sell them to investors. Congress created the two companies decades ago to promote home ownership. The consensus on Wall Street is that while Freddie and Fannie are publicly traded companies, the government provides an implicit guarantee on the company’s debt.

The government is also considering legislation that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies. If the government guaranteed the companyies' debt, it would effectively double the size of the national debt, The Times reported.

Shares of Freddie and Fannie have taken a beating this week, losing more than 75% of their value each, on concerns that the two companies were reaching the point of insolvency and would have to raise massive amounts of capital. Analysts at Lehman Brothers said on Monday that the two companies would have to raise as much as $75 billion in additional capital to break even. 

The companies’ cost of borrowing — their lifeblood for buying mortgages – has effectively doubled from a month ago as well.