Fannie Mae to seek $8.5 billion from US Treasury
07 May 2011
Troubled mortgage financier Fannie Mae yesterday reported losses for the first quarter and announced it would seek an additional $8.5 billion from the US Treasury.
The Washington DC company, which finances almost half of all US mortgages, posted the net worth of its assets at minus $131.1 billion at the end of March. It further indicated and it would likely never earn more than the dividends owed to the Treasury on preferred stock issued as part of its bail-out.
Michael J Williams, president and chief executive officer said, the company expected its credit-related expenses to remain elevated in 2011 as it continued to be negatively impacted by the protracted decline in home prices.
However, along with Freddie Mac, Fannie's smaller sibling, which also came out with financial results this week, Fannie's rate of new serious delinquencies is falling as the company completes loan modifications and foreclosure alternatives, together with foreclosures where necessary.
According to Williams as the company moved forward it was building a strong new book of business that now accounted for 45 per cent of the company's overall single-family guaranty book of business.
The company expects that this new lending would be profitable over the lifetime of the loans, with the average loan to value of the mortgages made since 2009 a prudent 68 per cent.