WASHINGTON — The take-over of Fannie Mae and Freddie Mac places enormous power in the hands of a new regulator, which must balance pressure to stem foreclosures and aid the ailing housing market with the need to reduce taxpayers' final bill.

The Federal Housing Finance Agency is now firmly in control of the two mortgage finance companies, which own or guarantee about $5 trillion in home loans, about half the nation's total.

Created over the summer, the agency now has a direct hand in overseeing the companies' activities. It replaced the companies' board of directors under a process known as a conservatorship.

Though the government has shut down Fannie and Freddie's sizable lobbying operations, lawmakers and influential real estate groups will likely hammer on the agency to reshape the mortgage companies' role in the market.

Real estate agents, mortgage brokers and homebuilders, for example, are expected to lobby FHFA to roll back fees and ease lending criteria that Fannie and Freddie put in place this year to stem losses on defaults and foreclosures.

"The faster and more energetically (Fannie and Freddie) are in the game, the faster the anticipated bottom of the housing market can be reached," said Jerry Howard, chief executive of the National Association of Home Builders. "The more they squeeze, the more pain is felt through the entire industry."

Fannie and Freddie, for example, have hiked fees for borrowers without sterling credit, while asking for bigger down payments.

"Their underwriting is so tight now, it's going to stifle any demand that would normally be in the marketplace," said Guy Cecala, publisher of Bethesda, Md.-based trade publication Inside Mortgage Finance.

However, if the agency allows the companies' lending standards to slip too far, they risk worsening their financial problems and putting taxpayers on the hook.

Consumer advocates and some Democrats are starting to call for Fannie and Freddie to help more borrowers facing foreclosure by modifying more loans.

"That's one advantage of the takeover," said Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee. "They were being torn between their private activities and their public mission. Now that's finished — it's the public mission."

The companies already have increased payments to loan servicers — companies that collect mortgage payments on behalf of Fannie, Freddie and other lenders — to encourage them to help more borrowers work out their loan problems and avoid foreclosure.

But it's not enough, said Ira Rheingold, executive director of the National Association of Consumer Advocates.

"Fannie and Freddie weren't really doing what they needed to do to stop foreclosures," he said. "There's an opportunity for the government to take charge here and to do large-scale (loan) modifications."

Making these tough choices will be the FHFA director, James Lockhart, a longtime friend and Yale fraternity brother of President Bush.

Lockhart hasn't tipped his hand yet about how the takeover will help troubled borrowers, emphasizing that it was designed to assist the broader housing market by pumping more money into the mortgage market.

An agency spokeswoman said yesterday that "we are working through all of these issues with the new management of the companies."