August 5, 2011 (Shirley Allen)
Government Sponsored Enterprise (GSE) Fannie Mae reports that it suffered a net loss of $2.9 billion in the second quarter of 2011, compared to a net loss of $6.5 billion in the first quarter of 2011, citing continued weakness in the housing and mortgage markets and the cost of loan modifications as contributors to its losses in the quarter.
The mortgage giant also stated in its Second Quarter Results report that it was making a $2.3 billion dividend payment to the Treasury Department making the quarter’s total net loss $5.2 billion.
As a consequence, Fannie Mae’s net worth deficit was $5.1 billion as of June 30, 2011, prompting the Acting Director of the Federal Housing Finance Agency (FHFA) to submit a request for $5.1 billion in funds to the Treasury Department to eliminate the mortgage giant’s net worth deficit.
The latest request for funds puts the total cost to taxpayers for Fannie Mae alone at $104.8 billion.
FHFA oversees the operation of Fannie Mae since the company was taken over by the government in September of 2008 after massive loses threatened to topple the company when the housing market collapsed.
Fannie Mae along with its sibling, Freddie Mac, currently own or guarantee about half of all mortgages in the United States and backed nearly 90 percent of the mortgages in the past year.
Since January 1, 2009, government agencies Fannie Mae, Freddie Mac, and Ginnie Mae have collectively guaranteed more than 80 percent of all single-family mortgages in the United States.
Fannie Mae has suffered $130 billion in single-family credit losses from January 1, 2009 through June 30, 2011, with the vast majority of those losses attributable to loans the company acquired from 2005 through 2008.
But Fannie Mae says the future looks brighter as 47 percent of its single-family guaranty book of business as of June 30, 2011 consisted of loans it had purchased or guaranteed since the beginning of 2009 which have a strong overall credit profile, are performing well and should be profitable over their lifetime.
Tags: Fannie Mae, Second Quarter Results, FHFA, mortgage market, loan modifications, mortgage giant, GSE, single-family mortgages