Fannie seeks cash after loss
By Alan Zibel |
March 1, 2010, Monday
|
Print Edition
Print Edition
FANNIE Mae is asking for a US government cash infusion of US$15.3 billion after posting another big loss in the fourth quarter of last year.
The mortgage finance company, seized by federal regulators in September 2008, lost US$16.3 billion, or US$2.87 a share, in the October-December period. That takes into account US$1.2 billion in dividends paid to the Treasury Department. It compares with a loss of US$25.2 billion, or US$4.47 a share, in the year-ago period.
During the most recent quarter, Washington-based Fannie posted US$11.9 billion in credit losses and a US$5 billion writedown for low income tax credit investments.
The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae's total to more than US$75 billion. The total bill for the duo has topped US$127 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of US$400 billion.
Earlier last week, Freddie lost US$7.8 billion for the fourth quarter, but didn't request any more money.
Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about US$5.5 trillion. That's about half of all mortgages.
They eased their lending standards for borrowers during the property boom and are paying for it.
The mortgage finance company, seized by federal regulators in September 2008, lost US$16.3 billion, or US$2.87 a share, in the October-December period. That takes into account US$1.2 billion in dividends paid to the Treasury Department. It compares with a loss of US$25.2 billion, or US$4.47 a share, in the year-ago period.
During the most recent quarter, Washington-based Fannie posted US$11.9 billion in credit losses and a US$5 billion writedown for low income tax credit investments.
The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae's total to more than US$75 billion. The total bill for the duo has topped US$127 billion.
Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of US$400 billion.
Earlier last week, Freddie lost US$7.8 billion for the fourth quarter, but didn't request any more money.
Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about US$5.5 trillion. That's about half of all mortgages.
They eased their lending standards for borrowers during the property boom and are paying for it.
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