Fannie Posts $18.9B Loss, Requests $15B From Treasury

Posted by Orb Staff on November 06, 2009 No Comments
Categories : Residential Mortgage

Fannie Mae has reported a net loss of $18.9 billion in the third quarter, compared with a loss of $14.8 billion in the second quarter of 2009.

The losses were largely due to $22 billion of credit-related expenses, reflecting the continued build of the company's combined loss reserves and fair-value losses associated with the increasing number of loans that were acquired from mortgage-backed securities trusts in order to pursue loan modifications, the company says.

As a result, Fannie Mae's regulator, the Federal Housing Finance Agency (FHFA), has submitted a request for $15 billion from Treasury on the company's behalf. The FHFA has requested that the Treasury provide the funds on or prior to Dec. 31.

The Wall Street Journal reports that the FHFA has approved a deal for Fannie Mae to sell about $2.6 in unused low-income-housing tax credits to unnamed buyers. Earlier this week, the WSJ reported that Goldman Sachs was interested in buying tax credits from the company, which is under government conservatorship.

Yesterday, the WSJ updated its report, saying Berkshire Hathaway Inc., a company owned by legendary investor Warren Buffett, had joined Goldman Sachs in the bank's bid for the credits. The companies could use the credits to offset federal tax expenses.

For such a deal to go through, it would need approval from the Treasury Department, which is reportedly hesistant to OK the transaction ‘on the grounds that it wouldn't benefit taxpayers,’ the WSJ reporters say.

SOURCES: Fannie Mae, Wall Street Journal

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