Fannie Mae Posts $3.55 Billion Fourth-Quarter Loss After Home Foreclosures Soar

[marmar]

from Bloomberg:




Fannie Mae Has $3.55 Billion Fourth-Quarter Loss (Update2)

By James Tyson

Feb. 27 (Bloomberg) -- Fannie Mae, the largest source of money for U.S. home loans, posted a $3.55 billion fourth-quarter loss and said its slump will worsen this year as rising foreclosures send credit costs soaring.

The net loss was triple analyst estimates. Fannie Mae recorded a $3.2 billion drop in the value of derivative contracts and $2.9 billion in credit expenses, according to a filing with the Securities and Exchange Commission.

``We are working through the toughest housing and mortgage markets in a generation,'' Fannie Mae Chief Executive Officer Daniel Mudd said in an accompanying statement.

Fannie Mae increased its estimates for credit losses and said home prices will decline more than its previous forecast, boosting costs for the $2.3 trillion of mortgages that the government-chartered company owns or guarantees. The prediction by Fannie Mae, which accounts for at least one in five home loans, heightened concerns that the housing market may drive the U.S. economy into recession and sent stocks lower.

``I expect it's only the beginning,'' said Joshua Rosner, the managing director of New York-based research firm Graham Fisher & Co.

Fannie Mae today raised its estimates for credit losses this year to a range of 11 basis points to 15 basis points from a range of 8 basis points to 10 basis points. Analysts including Paul Miller at Friedman Billings Ramsey & Co. in Arlington, Virginia, say credit losses will rise to a range of 15 basis points to 25 basis points this year and in 2009. ......(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=anvVENYazw98&refer=home

[Sadie5]

1. Not all are sub prime

We know a family that is in foreclosure because the husband lost his good paying job about 6 years ago. The wife went to work earning about $7 per hour and although the Dad found another job which up until now has turned into at least 3 that each paid a lower wage they just gave up. With their 3 kids, CC bills,property tax and utilities they just can't keep the house any longer. I suspect there are more cases such as this and bailing out the banks will do nothing for a large portion of those losing their homes due to job loss.