Fannie Mae reported its first-quarter 2009 results and showed that it lost $23.2 billion and is requesting $19 billion from the Treasury under a senior preferred stock purchase plan to preserve a positive net worth.
As the nation’s housing market reels in its worst downturn since the 1930s, credit-related expenses accounted for the majority of Fannie Mae’s loss, at $20.9 billion, the company said in a statement. It also took a $5.7 billion loss on mortgage securities.
"Persistent deterioration in housing, mortgage, financial and credit markets continued to adversely affect our financial results," the company said.
According to FNMA’s 10-Q, its outstanding unpaid principal balance of reverse mortgage included its mortgage portfolio was $45.9 billion and $41.6 billion as of March 31, 2009 and December 31, 2008, respectively. They estimate its market share of reverse mortgages was approximately 90% as of the end of 2008.
In the company’s 10-Q, liquidity is a major concern and FNMA states that its investments in multifamily whole loans and reverse mortgage loans are generally illiquid and generally can’t be relied upon to raise proceeds from their sale or as collateral for lending. This helps explain its reasons for raising the margins on reverse mortgages.
At the NRMLA regional conference in Chicago, Jeff Lewis, chairman of Generation Mortgage, said that in order for the market to be buyable, the margins need to go up to attract investors. As margins continue to rise, it will be interesting to see what the “tipping point” will be for other investors to come back into the market.