Fannie Mae Requests Another $1.5 Billion in Aid After 2Q Loss

Fannie MaeFannie Mae requested another $1.5 billion in federal aid after reporting a loss for the second quarter.

The extra funds would raise the total assistance to Fannie Mae to $86.1 billion, the company said in its earnings report. Federal assistance has helped keep Fannie Mae afloat, but also created a large dividend obligation.

"The company does not expect to earn profits in excess of its annual dividend obligation to Treasury for the indefinite future," Fannie Mae said.

The company reported a net loss of $1.2 billion for the second quarter, compared with a loss of $11.5 billion in the first quarter. Net revenue rose to $4.5 billion, from $3 billion in the first three months of the year.

Credit-related expenses fell by $7 billion to $4.9 billion as the rate of seriously delinquent loans fell.

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soflrealman

More foreclosure mess. Yesterday Fannie Mae cancelled all pending closings and or foreclosures that were with Chase bank. It seems that on a daily basis they break state laws, spend taxpayer dollars foolishly and are just incompetent. Who is responsible for the decisions made at Banks, Fannie and Freddie? Why are they not held accountable for this ongoing mess? How will we ever recover unless they can get it together?

October 01 2010 at 6:45 AM Report abuse rate up rate down Reply
J. R. Gilbert

What is wrong with an economy that is tied to new housing?

We are looking at it right now.

August 09 2010 at 7:07 AM Report abuse rate up rate down Reply
valyo8

Why should my tax dollars pay for somebody else's bad mortgage loan? Have our government leaders pay for it out of THEIR own pockets for a change....

August 08 2010 at 9:02 PM Report abuse +2 rate up rate down Reply
Steve

No more money for Fannie Mae or Freddy mac that is where all our Social Securty Money is going to and no one is paying it back, Mr. President??????????

August 08 2010 at 7:19 PM Report abuse +4 rate up rate down Reply
ANNE

It would be best to let Fannie and Freddie go out of business. Look at all the problems they have caused.

August 08 2010 at 4:37 PM Report abuse +3 rate up rate down Reply
twncty7

We throw so much money around what's another 1.5 billion anyway! If it aint going to them it will wind up in the hands of some major political donor anyway. Besides an economic recover can't happen without housing so I guess we are stuck catering to their every whim.

August 08 2010 at 4:35 PM Report abuse rate up rate down Reply
nnanciejean

Fannie & freddie created this economic meltdown and recession we are in. Thanks dems for excluding them from the latest fiancial reform bill and supporting them with OUR money. Just because they gave you dems millions in campaign contributions isn't reason enough to use OUR money to bail them out. They are NOT too big to fail. Let em go down.

August 08 2010 at 2:10 PM Report abuse +4 rate up rate down Reply
dphendrick

what ever happened to the mortage insurance funds we paid into?

August 07 2010 at 9:58 PM Report abuse +5 rate up rate down Reply
1 reply to dphendrick's comment
mkcc2short3

When you pay mortgage insurance (P.I or PMI on any loan over 80 % Loan to Value), you are actually paying for insurance that covers the servicer of your loan in case you (the home owner) defaults. Fannie Mae or Freddie Mac is not the servicer of your loan. Rather, they purchase the security (your loan) for the lender and package it with many others to sell on the open market. This function creates instant liquidy in the housing market. Thus, allowing the initial lender to continue to lend. Without this process current lenders guidelines would become extremly harsh.
For example currently, you are able to secure a home loan with proven assets and proven income, with a credit score of 640, with a debt-to-income ratio of 40-45%, and a Loan-to-Value of 93.5% under FHA (Federal Housing Association) Guidelines. Please understand that an FHA loan is a government insured loan that is not secured by fannie mae or freddie mac. These loans also allow for a streamlined refinance meaning no appraiser is involved as long as all payments have been made w/in the past 12 mo's with no 30 day lates. However, the biggest drawback is the required mortgage insurance and restrictions in properties.
Fannie and Freddie currently only secure mortgages under 90% LTV's (Loan-to-Value) with much higher standards accross the board then stated above. Without Fannie and Freddie these standards would go back to the 80's with a requirement of a 20% down-payment and a flawless credit history. Remember, after the govn. take-over freddie and fannie were required to take on plenty of bad debt in order to attempt to revive the credit and housing markets. Unfortunatly, these efforts created a larger problem and a burden to the american tax-payer putting us on the line for the debt.
Lets be honest Fannie and Freddie secure over 50% of all home loans in the country imagine what would happen if one day we wake up and they are gone. Fannie and Freddie are business entities with investors who demand a profits and will push for reform. In the late 90's and early 2000's was anyone complaining about Fannie and Freddie or was the population thinking "Wow, I can afford what?" and the average uneducated reached beyond their means.
This brings us to the current situation, Reform. Allow Fannie and Freddie to become a private entity and not a government bound campaign topic. Realize that fannie and Freddie posted their smallest loss since the crisis with increased revenue and a decrease in credit obligations. Revenues have increased by 1.5 billion over the past quater (3 mo's) with a better loan book.
The average American is extremly uneducated regarding home loans. I worked for a mortgage brokerage and watched countless people sign page after page with out reading a word. Heck, you would think someone taking out a 200000 dollar loan would read 20 pages nope. Maybe, its not Fannie or Freddie's fault that as a business their job is to create revenue and take risks. Maybe, the Americans who took out these bad loans should be to blame. Afterall, if all americans had good credit and aptitude maybe sub-prime loans would not have existed. Why did I continue to write, sorry for the ummm article...

See full article from DailyFinance: http://srph.it/bQpqPd

August 09 2010 at 2:23 AM Report abuse rate up rate down Reply
flp44

Fannie and Freddie lose tens of billions every quarter, and the taxpayers pick up the tab. But they were not part of the financial reform bill. How can that be? The bill was created by Barney Frank and Chris Dodd,(both responsible for the housing collapse) business as usual by our inept government leaders.

August 07 2010 at 3:24 PM Report abuse +8 rate up rate down Reply
Employmnt Bckgrd

I cant pay my mortgage and they get bailed out that is BULLSHIT

August 07 2010 at 2:34 PM Report abuse +9 rate up rate down Reply