largest provider of funding for U.S. home mortgages, on Friday 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.
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.
the nation's housing market reels in its worst downturn since the
1930s, credit-related expenses accounted for the majority of Fannie
Mae's loss, at $20.9 billion, the company said in a statement. It also
took a $5.7 billion loss on mortgage securities.
credit losses soared 85 percent as the U.S. economy faltered, expanding
delinquencies that have wreaked havoc on the entire financial system to
consumers with better credit, it said.
On Friday, the U.S. government said the unemployment rate rose to 8.9 percent in April, the highest since September 1983.
Mae's guaranty 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
Fannie Mae's results appear to counter recent data
suggesting the housing market is bottoming as falling home prices and
mortgage rates increase affordability. This week the government said
pending sales of U.S. homes rose in March for a second straight month.
Shiller, the Yale University housing economist who predicted the
housing bubble, this week said a bottom would probably not be seen
The speed of the downturn has greatly limited the company's ability to estimate loss reserves, it said.