Magazine article Mortgage Banking

Fannie Mae Reports Loss of $14.8 Billion in Second Quarter

Magazine article Mortgage Banking

Fannie Mae Reports Loss of $14.8 Billion in Second Quarter

Article excerpt

Fannie Mae's performance in the second quarter resulted in a negative net worth of $10.6 billion, prompting its regulator to request from the Treasury Department a new infusion of an additional $10.7 billion. That new funding will come on top of the $35.2 billion that Treasury already injected as of June 30, 2009, to preserve positive net worth at the company.

In a release announcing the company's quarterly loss of $14.8 billion, the following factors were cited for the loss: "Second-quarter results were driven primarily by $18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment. Credit-related expenses were partially offset by fair-value gains. The company also reported a substantial decrease in impairment losses on investment securities, which was due in part to the adoption of new accounting guidance."

The Washington, D.C.-based company had net interest income of $3.7 billion in the second quarter, up from $3.2 billion in the prior quarter. Guaranty fee income slipped by 5 percent in the second quarter, going from $1.8 billion in the first quarter to $1.7 billion.

Net revenue was $5.6 billion in the second quarter. That was 8 percent better than the first quarter, according to Fannie Mae.

The company said that its total nonperforming loans in its guaranty book of business hit $171 billion as of June 30. As of March 31, that number was $144.9 billion and it was $119. …

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