FANNIE Mae, the mortgage-finance company under government conservatorship, has reported a $2,9bn second-quarter loss and says it will seek $5,1bn in US Treasury department aid to balance its books.
Fannie Mae requested the money to eliminate a net worth deficit of $5,1bn for the three months to June 30, according to a Securities and Exchange Commission filing by the Washington-based company on Friday .
The loss, which compares with a $1,2bn loss for the same period a year earlier, was mostly due to credit- related expenses on home loans made before the 2008 financial collapse. About 47% of Fannie Mae's single-family portfolio consisted of mortgages purchased or guaranteed since the beginning of 2009.
"We believe the credit quality of the new book will position it for good and sustained profitability in the future," chief financial officer Susan McFarland said on Friday .
Fannie Mae also made a $2,3bn payment to the Treasury in the second quarter. The Treasury, which owns almost 80% of the company, has promised unlimited support for Fannie Mae and its smaller rival, Freddie Mac, in exchange for a 10% dividend on its stakes.
The two companies, which own or guarantee more than half of US single-family loans, were seized by the government in September 2008 after losses related to subprime lending threatened them with insolvency. Their performance has improved as those bad loans are resolved through foreclosure or refinancing.
The company has reported one profit since the financial crisis, $73m in net income for the fourth quarter of last year that was tied to a one- time $1,3bn payment from the Bank of America to settle Fannie Mae loan buy-backs. Bloomberg