RPT-UPDATE 3-Fannie Mae seeks $4.6 billion in aid after Q4 loss

Wed Feb 29, 2012 1:25pm EST

* Mortgage firm posts $2.4 billion fourth-quarter loss

* Fannie's borrowing from taxpayers tops $116 billion

* Fourth-quarter credit-related expenses total $5.5 billion

By Margaret Chadbourn

WASHINGTON, Feb 29 (Reuters) - Fannie Mae, the biggest source of money for U.S. home loans, said on Wednesday it would seek $4.6 billion in additional federal aid after reporting a fourth-quarter loss.

Earlier on Wednesday, the government-controlled mortgage finance company posted a loss of $2.4 billion for the quarter ended Dec. 31. That pushed Fannie Mae's loss for 2011 to $16.9 billion from $14.0 billion a year earlier, the company said.

Fannie Mae's pre-2009 book of soured loans and declining home prices continue to make it difficult for the company to turn a profit.

"We think that we have reserved for and recognized substantially all of the credit losses associated with the legacy book," Chief Financial Officer Susan McFarland said in an interview.

The government seized Fannie Mae and Freddie Mac, which together back roughly half of all outstanding U.S. mortgages, in September 2008 as losses from failing home loans threatened the agencies' solvency.

Fannie Mae has borrowed more than $116 billion from the government and paid almost $20 billion in the form of dividends.

"We're very focused on returning to profitability so we don't have to draw (from Treasury) to cover operating losses," said McFarland, who is also an executive vice president.

FIGHT WITH BANK OF AMERICA

Fannie Mae warned it might be forced to request additional aid due to a mortgage-repurchase disagreement with Bank of America Corp. over soured mortgages that failed to meet its underwriting standards.

Last week, Bank of America said it had stopped selling some mortgages to Fannie Mae because of a dispute over requests from the government-run company to buy back defective loans.

"If Fannie Mae collects less than the amount it expects from Bank of America, Fannie Mae may be required to seek additional funds from Treasury," the company said in a press release issued on Wednesday.

Fannie Mae and Freddie Mac, the government-sponsored enterprises, don't lend to consumers. Rather, they buy and insure mortgages from banks to let lenders make more loans.

Fannie Mae's credit-related expenses were $5.5 billion in the fourth quarter, compared with $4.3 billion a year earlier and $4.9 billion in the third quarter.

In the fourth quarter, Fannie Mae's provision for credit losses and foreclosed-property expenses rose to $4.7 billion from $4.5 billion in the third quarter. Its provision for loan losses narrowed to $18.7 billion from $23.6 billion a year ago.

Freddie Mac, which hasn't yet reported fourth-quarter results, has received more than $71 billion in government aid. It had paid back about $15 billion as of the third quarter.

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Comments (3)
thelip95032 wrote:
just ask all the people at FM that have been getting million dollar bonuses to give them back.

Feb 29, 2012 11:49am EST  --  Report as abuse
SensibleSam wrote:
…or get Newtie to give some money back

Feb 29, 2012 1:17pm EST  --  Report as abuse
jus10 wrote:
If you cant stand on your own two feet then lay on your back and take it like we had to when you were bailed out before.

This is outrageous!!! I am a small business owner and if I make a mistake I cant just call on my “friends” in government and the Fed to bail me out.

Feb 29, 2012 3:34pm EST  --  Report as abuse
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