Fannie Mae posts $23bn loss
New York, May 9, 2009
Fannie Mae, the largest provider of funding for US home mortgages, yesterday said it lost $23.2 billion in the first quarter, sending it to the Treasury for a second time for capital to keep it afloat.
The Washington-based company said its regulator requested $19 billion from the Treasury under a senior preferred stock purchase plan to preserve a positive net worth.
The loss compares with deficits of $2.2 billion in the year-ago period, and $25.2 billion in the previous quarter, said a report in our sister publication, The Gulf daily News.
As the US housing market reels, credit-related expenses accounted for the majority of Fannie Mae's loss, at $20.9 billion, the company said. It also took a $5.7 billion loss on mortgage securities.
Provisions for credit losses soared 85 per cent as the US economy faltered, expanding delinquencies that have wreaked havoc on the entire financial system to consumers with better credit, it said.
Fannie Mae's guarantee business, 'including loans with lower risk characteristics, has begun to experience increases in delinquency and default rates as a result of the sharp rise in unemployment, the continued decline in home prices, the prolonged downturn in the economy' and the rise in loan balances relative to property values, it said. – TradeArabia News Service