Fannie Mae Lost $23.2 Billion Due to Foreclosure Homes
Fannie Mae, one of the two government-controlled mortgage finance firms, has lost $23.2 billion in the first quarter because of large numbers of forclosure homes that it had to cover.
The mortgage firm also announced that it has asked the federal government to provide $19 billion to help fund its continued operations. In the first months of 2009, Fannie Mae also asked the U.S. Treasury to provide $15.2 billion to help cover its losses in 2008.
It also reported that the Treasury has been authorized by President Obama to provide Fannie Mae with $200 billion.
Fannie Mae attributed its losses to the large numbers of forclosure homes that it had guaranteed. The inventories of foreclosed homes were also made worse by increasing number of defaults and delinquencies. In 2009, the number of forclosure homes has been rising largely due to rising unemployment rates. The falling prices of foreclosed properties worsened the housing market and led to further rises in inventories of forclosure homes.
Fannie Mae’s first quarter loss was lower than its loss in the last quarter of 2008, which totaled $25.2 billion and which occurred after the government took over the firm.
The first quarter loss was more than ten times the net loss in last year’s first quarter. Fannie Mae reported that it lost $4.09 per share in the first quarter.
Fannie Mae said that because of the large numbers of forclosure homes, it expected to need more financial help from the Treasury. It announced that the weak conditions in the financial and housing markets have made it unable to recover some of its losses.
On Friday, Fannie Mae was not able to be influenced by the stock rally. Its stock price of less than $1 fell more steeply by about 7 percent in the early morning trading.
The company also reported that despite its efforts in implementing foreclosure moratoriums, large numbers of foreclosed homes still arose. In the first quarter this year, it purchased 25,374 forclosure homes, which is an increase from the 20,998 it acquired in last year’s fourth quarter.
David Ursani, a Wall Street analyst, said that the federal government has been using Fannie Mae as one of its tools in controlling loses in the mortgage sector. He said that Fannie Mae has incurred much loss due to the wave of forclosure homes that it guaranteed.
By Cassiano Travareli