Monday, August 10, 2009

Fannie Mae is back with its hand out for more. After receiving over $101 billion of taxpayers' money, now it wants $10.7 billion more.

After massive losses, Fannie asks Treasury for $10.7 billion

Taxpayers gave troubled mortgage giant over $44 billion since April, over $101 billion in total
Troubled state-backed mortgage firm Fannie Mae took a massive 14.8-billion-dollar loss in the second quarter, and asked the US Treasury for another 10.7 billion dollars in aid, the company said Thursday.
Fannie Mae and its fellow state-backed lender Freddie Mac have already received hundreds of billions of dollars as part of a virtual government takeover aimed at avoiding their collapse in the wake of the subprime mortgage crisis.
“Today’s results bring the company’s cumulative losses over the last two years to $101.6 billion and will bring its total draw on the Treasury to $44.9 billion since April,” noted Bloomberg.
The latest loss for Fannie Mae came on the heels of a 23.2 billion-dollar loss in the first quarter.
“Fannie Mae said it expects the quality of its assets to worsen further and to continue accumulating losses as it executes President Barack Obama’s efforts to modify or refinance loans for as many as nine million homeowners,” Bloomberg reporter Dawn Kopecki continued.
“Due to current trends in the housing and financial markets, we expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury,” the firm’s quarterly report said, according to The Wall Street Journal. “As a result, we are dependent on the continued support of Treasury in order to continue operating our business.”
The paper continued: “To deal with souring loans, the company said it reached workout deals on 41,000 mortgages during the quarter. Loan modifications made up 40% of the total. Fannie said it expects increased activity under the federal Making Home Affordable program as mortgage services gain experience with it. The company noted trial modifications jumped in July from the second quarter.”
“In one hopeful sign, Fannie Mae narrowed its quarterly loss to $14.8 billion, or $2.67 per diluted share, down from $23.2 billion, or $4.09 per share, in the previous quarter,” noted CNN. “The company lost $2.3 billion, or $2.54 per share, in the second quarter last year.”
“Credit losses from the housing crisis are still to blame for Fannie Mae’s dour results,” the television news network continued. “The company racked up $18.8 billion in credit-related expenses during the latest quarter. However, the company reduced its provision for credit losses to $18.2 billion, from $20.3 billion in the first quarter, because of a slowdown in the increase of estimated defaults and losses per default.”
By market’s close on Thursday, shares in Fannie Mae (NYSE: FNM) were trading at just 79 cents.

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