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Continued problems in housing market continue to drag down government-controlled mortgage finance giant.

Last Updated: November 10, 2008: 8:57 AM ET

NEW YORK (CNNMoney.com) -- Troubled mortgage-finance giant Fannie Mae reported that it lost $29 billion in the most recent quarter, driven by an accounting change and a large jump in bad loans.

Much of the loss was due to a $21 billion non-cash charge related to how it accounts for tax credits it had been carrying on its books - Fannie is no longer confident it will make enough money in the future to allow it to use those tax credits.

Even without that charge, results were much weaker than a year earlier.

With more loans in default, credit-related losses soared to $9.2 billion from $5.3 billion in the second quarter and $1.2 billion a year earlier.

The overall loss came to $13 a share, far worse than the $2.3 billion, or $2.54 a share it lost in the second quarter. A year earlier, Fannie lost $1.4 billion, or $1.54 a share. Analysts surveyed by earnings tracker Thomson Reuters had forecast a loss of only $1.60 a share.

The Treasury Department took over control of Fannie Mae along with rival Freddie Mac (FRE, Fortune 500) on Sept. 7, after it concluded the firms were facing rising losses from mortgage-backed securities.

The two firms together control or guarantee about $5 trillion in mortgage loans, and they have become nearly the only financial institutions able to bundle loans together into securities that could be sold to investors.

Their ability to continue to do so has become a crucial source of funding for banks and other mortgage lenders, which need to sell the loans they make in order to have the funds to make additional loans.

The two firms were set up by the federal government, even though they were owned by shareholders.

In July, Congress voted to give Treasury authority to pump unlimited amounts of money into Fannie and Freddie, a move that the firms and Treasury Secretary Henry Paulson said at that time they believed would be unnecessary.

But in September, with the threat of mounting losses, Treasury had to put the firms into conservatorship, a form of reorganization similar to bankruptcy, as it announced it stood ready to use taxpayer dollars to cover further losses.

The move was the first of a series of federal bailouts of the nation's top financial institutions in response to the crisis in credit and financial markets.