Fannie Mae reported net loss of $8.7 billion in the first quarter, including a $2.2 billion dividend payment to the Treasury Department. The loss narrowed from $13 billion one year ago. Fannie said still falling home prices drove losses during the quarter. The government-sponsored enterprise estimated home prices fell 1.8% during the quarter, even though some regions experienced gains. The mortgage giant's regulator the Federal Housing Finance Agency requested $8.5 billion from the Treasury to eliminate Fannie's net worth deficit. Fannie now owes the Treasury $99.7 billion and so far paid $12.4 billion in dividends. Its sibling company, Freddie Mac actually reported a profit in the first quarter and did not request funds. Together both Fannie and Freddie have pulled a total of $164.4 billion from the Treasury since entering conservatorship in 2008. Despite the continued losses, Fannie Mae showed how vital its operations are to funding the housing market. It remained the largest issuer of mortgage-backed securities in the first quarter, purchasing or guaranteeing roughly $189 billion in loans. The company's market share dipped to 48.6% in the quarter from 49% in the previous period. But Fannie said if the market shifts away from refinancing as is likely to occur as mortgage rates rise, market share will dip further. While business could be declining, legacy issues are too. The serious delinquency rate on Fannie Mae loans dropped to 4.27% in the first quarter from 5.47% one year ago and 4.48% in the previous period. The company said modifications and other workouts, combined with foreclosures when other alternatives are exhausted, outnumbered new delinquent loans hitting its books. Fannie Mae CEO Michael Williams said "credit-related expenses" will remain high in 2011 as it remains exposed to falling home prices. "As we move forward, we are building a strong new book of business that now accounts for 45% of the company’s overall single-family guaranty book of business," Williams said. "We continue to be the leading provider of liquidity for single-family mortgages and affordable multifamily rental housing while we remain focused on our responsibility to find solutions for distressed homeowners and their families." Write to Jon Prior. Follow him on Twitter @JonAPrior.