Fannie Mae Loses $29 Billion on Write-Downs

This is scary:

The company’s results suggested that home prices are far from a bottom and that the government would probably have to pump tens of billions of dollars into Fannie Mae and its sister company Freddie Mac. Regulators took control of the two companies in September and the Treasury Department said it would invest up to $100 billion in each but it had not yet put any money into the companies.

Fannie Mae said it lost $29 billion (or $13 a share) in the third quarter, compared with a $1.4 billion loss in the period a year ago. Much of that loss was a result of a $9.2 billion charge for credit losses and a $21.4 billion write-down of deferred tax assets that will probably be worthless.

…

Fannie Mae said it had $9.3 billion of capital after its write-downs.

But the company said it would have a capital deficit of $46.4 billion if it calculated its securities on a “fair value basis,” or according to what they would fetch in the market.

Policy makers need Fannie Mae and Freddie Mac to be healthy because the companies are financing about 70 percent of all home loans being made.

When other federal agencies like the Federal Housing Administration are included, the government’s share of the mortgage market climbs to as much as 90 percent.

Notes

  1. marklow reblogged this from mattlehrer and added:
    The Wall Street Journal added that home prices nationwide will drop an average of almost 9% by the end of the fourth...
  2. mattlehrer posted this