Fannie Mae to Tap Bailout Credit Line for $8.4 Billion More

Fannie Mae, Freddie MacFannie Mae, the top mortgage financing company effectively owned by taxpayers, has asked for another $8.4 billion from the U.S. Treasury’s open credit line reserved for it and smaller sibling Freddie Mac.
Fannie’s latest bailout request comes after reporting a $13.1 billion loss in the first quarter. The report came with a somewhat ominous outlook.
“Due to current trends in the housing and financial markets, we continue to expect to have a net worth deficit in future periods,” Fannie Mae said in its quarterly report released today.
Last week, Freddie Mac reported an $8 billion loss in the first quarter, and asked Treasury for an additional $10.6 billion.
Fannie’s total in bailout withdrawals is now at $83.6 billion; Freddie’s at $61.3 billion.
Treasury’s “Preferred Stock Purchase Agreements” ensures that each firm maintains a quarterly positive net worth through 2012, and also gives the U.S. government majority stakeholder rights.
The latest report from Fannie Mae will likely intensify calls from Republicans to include an overhaul of the two mortgage funding giants in the current financial oversight reform under debate in the Senate. But the Obama Administration is months away from formulating a reform plan for Fannie and Freddie.
The two financing companies have been under U.S. conservatorship since December 2008, after accumulating billions in securities tied to toxic subprime mortgages and other high-risk debt.
Fannie said today that in the first quarter it purchased or guaranteed an estimated $191.4 billion in loans, “measured by unpaid principal balance, including approximately $40 billion in delinquent loans purchased in March from our mortgage-backed securities trusts…”
It reported an increase in the single-family serious delinquency rate to 5.47 percent as of March 31, 2010, from 5.38 percent as of December 31, 2009.
But the delinquency rate grew at a slower pace than in each quarter of 2009 “as we continued to work with our servicers to reduce delays in completing workouts and more modifications and foreclosure alternatives are being pursued,” Fannie Mae said.
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