Fannie Mae Posts Larger Than Expected Loss

Author: Rob K. Blake | Date: August 8, 2008 | Filed In: Mortgage News

Fannie Mae today reported a $2.3 Billion Q2 loss much greater than expected. Fannie Mae’s loss of $2.54 a share shocked analysts who expected a loss of 68 cents a share.

Fannie Mae announced they’d be cutting their dividend to 5 cents a share down 30 cents to preserve capital. The company will cease buying Alt-A mortgages as well. The Alt-A mortgage products typically require less income documentation or credit worthiness than conventional mortgage programs. These riskier loans are responsible for much of Fannie Mae’s losses.

Fannie Mae CEO Speaks

CNN reports in a conference call CEO Daniel Mudd said,

“The housing market has returned to earth fast and hard. …There is progress but we have a long way to go,”

Fannie Mae needs to raise more capital and thanks to Hank Paulson they have an unlimited access to capital at the Treasury Department.

Any day now, I expect Hank to issue a statement when he uses the credit lines or the stock purchasing power he promised he’d most likely never use.

Yea…right…”most likely” just became “most definitely”…and “never” just became “soon”.

Good Luck!

Author: Rob K. Blake