Fannie Mae asks $8.4 Billion aid to stay afloat
The largest U.S residential mortgage funds provider Fannie Mae , seeks an additional $8.4 billion from the U.S government, not forgetting that it received already more than $84.6 billion, however her overall efficiency did not pick up yet as it witnessed a huge considerable loss of $13.1 throughout its performance within the first quarter of this year, while smaller mortgage finance companies such as Freddie Mac needs currently $10.6 billion from the government after a first quarter loss of $8 billion.
“Our first-quarter results were driven primarily by credit-related expenses, which remain at elevated levels due to weaknesses in the economy and the housing market,” the company said in a written statement.
The company lost $11.5 billion in the first three months of this year, it said today in a Securities and Exchange Commission filing. Fannie Mae had posted $136.8 billion in losses in the preceding 10 quarters, and the new aid request would bring its total draw from the Treasury to $84.6 billion since April 2009.
Fannie Mae said the quarterly loss was largely attributable to new accounting rules that required the company to move $1.5 trillion in mortgage guarantees to its balance sheet.
Shares of Washington-based Fannie Mae rose 4 percent to $1.07 in New York Stock Exchange Composite trading at 10:58 a.m. after climbing as much as 11 percent earlier.
The company and Freddie Mac, its McLean, Virginia-based rival, have been under U.S. conservatorship since September 2008, when they were seized after losses on subprime mortgages pushed them to the brink of collapse. The so-called government- sponsored enterprises, which own or guarantee more than $5 trillion in U.S. residential debt, financed or backed more than 70 percent of single-family mortgage loans in 2009.
Fannie Mae continues to inject liquidity into the home-loan market and helped modify nearly 94,000 mortgages in the first quarter to prevent foreclosures, doubling the number completed in the fourth quarter of 2009, Chief Executive Officer Mike Williams said in a statement.
Even with the assistance, Fannie Mae increased foreclosures to almost 62,000 homes from about 47,000 in the prior quarter, according to the filing. The company’s foreclosure rate increased and its inventory of homes grew from $8.5 billion to $11.4 billion during the first quarter.
“We expect our foreclosures to increase in 2010 as a result of the adverse impact that the weak economy and high unemployment have had and are expected to have on the financial condition of borrowers,” the company said in a press release.