Fannie Loses $23.2bn, Needs to Find $19bn

Fannie Mae (FNM) lost a net $23.2bn — or $4.09 per share — in Q109. A total $20.9bn in credit-related expenses, $5.7bn in securities impairments, and $1.5bn in fair value losses drove the quarterly losses, Fannie Mae officials said in the earnings statement. The loss, in addition to a decrease in unrealized losses on available-for-sale securities, resulted in a net worth deficit of $18.9 billion as of quarter-end. The Federal Housing Finance Agency, acting as Fannie’s conservator, submitted a request for $19bn from the US Treasury Department in response to the net deficit. The FHFA requested the funds on or prior to June 30, 2009 as part of the senior preferred stock purchase agreement between Fannie and the Treasury. Fannie’s quarter still saw a few bright spots, despite the net deficit. Fannie reported $77bn of refinance in March, the largest volume of refinance activity since 2003, mostly due to its participation in the Obama Administration’s Making Home Affordable modification program. Fannie’s mortgage credit book of business increased to $3.14trn as of quarter-end, from $3.11trn at the end of ’08. It’s market share of new, single-family mortgage-related securities issuance rose to 44.2% in Q109, compared with 41.7% in Q408. At the same time, nonperforming loans on Fannie’s books swelled to $144.9bn  as of quarter-end, from $119.2bn at the end of the fourth quarter and from $10.9bn at the end of Q108. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.

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