FHFA Requests $2.5B Draw To Cover Fannie

Posted by Orb Staff on November 08, 2010 No Comments
Categories : Residential Mortgage

Fannie Mae has reported a third-quarter net loss attributable to stockholders of $3.5 billion. That figure includes $2.1 billion in dividend payments to the U.S. Treasury Department.

The Federal Housing Finance Agency (FHFA), in turn, has requested a $2.5 billion draw from the Treasury on Fannie's behalf.

Fannie Mae purchased or guaranteed about $613 billion in loans in the first three quarters of the year, including approximately $195 billion in delinquent loans that the company bought from its mortgage-backed securities trusts.

The company also took possession of 216,116 properties in the first nine months of the year – more than double the 98,428 real estate owned (REO) properties recorded in the first nine months of 2009.

Fannie Mae, which disposed of some 135,000 REOs this year, says that, compared to last year, the percentage of its properties that it is unable to market for sale has increased. Common reasons for Fannie's inability to resell include that properties are in redemption periods (during which former mortgagors and subordinate-lien holders can try to redeem the property), properties are still occupied or properties are being repaired.

‘As we are unable to market a higher portion of our inventory, it slows the pace at which we can dispose of our properties and increases our foreclosed-property expense related to costs associated with ensuring that the property is vacant and maintaining the property,’ Fannie says in its quarterly filing with the Securities and Exchange Commission.

As of the end of September, nearly one-third of the properties that Fannie Mae is unable to market were in redemption status, which Fannie says elongates the time that a property is in REO by an average of two to six months. Nearly 40% of Fannie's REOs were occupied as of Sept. 30.

Fannie also reports that about 53% of its loans that were modified during 2009 were current or paid off as of nine months following the modification. By comparison, 31% of loans modified during 2008 were current or paid off as of nine months following the loan modification.

‘As we have focused our efforts on distressed borrowers who are experiencing current economic hardship, the short-term performance of our workouts may not be indicative of long-term performance,’ Fannie says. ‘We believe the performance of our workouts will be highly dependent on economic factors, such as unemployment rates and home prices.

SOURCE: Fannie Mae

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