Fannie Mae Requests $8.4B in Federal Aid after Q1 Loss

Tue, May 11, 2010


Mortgage giant Fannie Mae has reported a net loss of $11.5 billion for the first quarter of 2010. The deficit has prompted the GSE to ask the Treasury for another $8.4 billion in federal funding.

Last week, Freddie Mac requested $10.6 billion from the Treasury after it too posted another quarterly loss.

According to Fannie Mae’s earnings announcement, after adding in $1.5 billion of dividend payments to the Treasury, the Washington, D.C.-based company’s total Q1 loss attributable to common shareholders was $13.1 billion, or $2.29 per diluted share.

The negative column did narrow slightly, though, compared to the fourth quarter of 2009, when the GSE reported a net loss of $16.3 billion, or $2.87 per share, for common stockholders.

“Our first-quarter results were driven primarily by credit-related expenses, which remain at elevated levels due to weaknesses in the economy and the housing market,” Fannie Mae said in its earnings statement.

Like its sibling mortgage financier Freddie Mac, Fannie Mae also attributed the red on its balance sheet, in part, to new accounting standards that took effect January 1,
2010, which require the GSE to record the underlying assets of mortgage-backed securities (MBS) trusts and some liabilities held by the trusts on its own books.

Fannie Mae’s single-family serious delinquency rate increased to 5.47 percent as of March 31, 2010, up from 5.38 percent as of December 31, 2009. But the GSE says this delinquency ratio grew at a slower pace than in each quarter of 2009, and on a month-to-month basis, the March rate was down from 5.59 percent in February.

Total nonperforming loans in Fannie Mae’s guaranty book of business were $223.9 billion as of March 31, 2010, compared with $216.5 billion as of the end of last year.

The GSE acquired 61,929 single-family properties through foreclosure in the first quarter of 2010, compared with 47,189 in the fourth quarter of 2009. As of March 31, 2010, Fannie Mae’s inventory of REO homes was 109,989, carrying a total value of $11.4 billion. That compares to 86,155 REOs as of December 31, 2009, with a combined value of $8.5 billion.

During the first quarter of 2010, Fannie Mae purchased or guaranteed an estimated $191.4 billion in loans, measured by unpaid principal balance, including approximately $40 billion in seriously delinquent loans bought back from MBS trusts in March.

The GSE’s estimated market share of new single-family mortgage-related securities issuances was 40.8 percent in the first quarter of 2010, compared with 38.9 percent in the fourth quarter of 2009. Fannie Mae’s mortgage credit book of business was $3.18 trillion as of the end of March, compared with $3.23 trillion at the end of last year.

Fannie Mae said the risk profile of newly-acquired loans “remained strong.” For single-family loan acquisitions in the first quarter of 2010, the weighted average original loan-to-value ratio was 69 percent and the weighted average FICO credit score was 758.

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