Fannie Mae reports record quarterly $29 billion loss
Fannie Mae reported a record $29 billion third-quarter net loss and a $13 per share loss since being placed under conservatorship by the U.S. government last month. Since taking over as CEO of Fannie Mae, Herbert Allison has cut the value of the mortgage provider’s assets by at least $21.4 billion and announced that it may need to approach the Fed for additional funding.
Allison has also reduced most of Fannie Mae’s deferred tax credits and raised default estimates, and announced that credit losses will increase. Furthermore, he has increased reserves for future credit losses from $3.7 billion in the last quarter. Fannie Mae says it has not asked for help from the government as of November 7th. The Federal Housing Finance Agency (FHFA) took control of Fannie Mae and Freddie Mac on September 6th. U.S. Treasury Secretary Henry Paulson said he would invest as much as $100 billion in each company to keep their net worth positive.
Source: Mortgage News Daily; ©CEP News Ltd. 2008