Fannie Mae Reports $2.2 Billion Loss

Fannie Mae reported losses of $2.2 billion in the first quarter and the nation's largest buyer of home loans said Tuesday it would cut its dividend and raise $6 billion in new capital, with expectations that the housing slump will persist into next year. Home prices fell faster in the first quarter than Fannie Mae had expected, the government-sponsored company said, and it will open a $4 billion share offering immediately, with the remainder being offered in the "very near future."
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Related:
Fannie Mae Taps Investors for $6B
and Cuts Dividend After $2.2B Loss
Fannie Mae, the US government-backed financial business charged with propping up the mortgage market, told its shareholders they would have to accept lower dividends and a smaller say in the company as it steps in to ease the credit crisis. The company raised $6bn in new funding, diluting existing shareholders, and cut the dividend pay-out after posting an unexpectedly large $2.2bn loss in the past three months. Rising defaults by homeowners and losses on mortgage derivatives were among the reasons for the red ink, and the financial results raised concerns about Fannie Mae's ability to act as a prop to the housing market.

Posted by Editor at May 8, 2008 04:00 AM