Fannie Mae has followed Freddie Mac's lead and reported in a filing with the Securities and Exchange Commission that the Federal Housing Finance Agency (FHFA), acting as its conservator, will submit a request to the U.S. Department of the Treasury to draw funds on behalf of the company.
The draw – expected to be between $11 billion and $16 billion – will be requested under the $100 billion Senior Preferred Stock Purchase Agreement entered into last September between the U.S. Treasury and the FHFA, acting on behalf of Fannie Mae.
Like Freddie Mac, Fannie Mae says the actual amount of the draw may differ materially from the estimate, because Fannie Mae is still working through the process of preparing and finalizing its financial statements for the fourth quarter of 2008.
The estimate of the amount of the draw expected to be requested reflects management's current estimate of the effect that the company's anticipated net loss (primarily as a result of credit expenses and fair-value losses during the fourth quarter of 2008), as well as other items, would have on Fannie Mae's net worth as of the end of the fourth quarter of 2008. The FHFA has not previously requested any funds on behalf of Fannie Mae under the Purchase Agreement.
SOURCE: Fannie Mae