Fannie Mae adds capital with $2 bln preferred stock

NEW YORK (Reuters) - Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz), the largest provider of financing for U.S. residential mortgages, on Tuesday said it sold $2 billion in preferred stock to bolster its capital position.

After reporting a loss for the third consecutive quarter on May 6, the issue brings capital raised by the government-sponsored enterprise to $6.5 billion in less than a week. The total of fresh capital, which will cushion against further losses and enable Fannie Mae to continue purchasing and guaranteeing mortgages, exceeds the company's initial guidance by $500 million.

Lawmakers and regulators have urged Fannie Mae and rival Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) to do more to aid the ailing U.S. housing market.

Mortgage lenders and borrowers have increased their reliance on the two companies since last summer as the credit crunch sealed off access to money from other funding sources, such as Wall Street investment banks and their investors.

But since June of last year, Fannie Mae has piled up more than $7 billion in losses as the U.S. housing slump led to soaring foreclosures and losses, even on the mostly-prime loans the mortgage finance company funds or guarantees.

Fannie had expected a $7 billion issue of preferred stock in December would carry it through 2008, but continued erosion in housing has led it to boost forecasts for credit losses.

The non-cumulative, non-convertible perpetual preferred stock has a face value of $25 per share and pays a dividend rate of 8.25 percent, the government-sponsored enterprise said in a statement. Fannie Mae has the option to redeem the shares on or after May 20, 2013, it said.

Washington-based Fannie Mae also sold $2.25 billion in convertible preferred stock and $2.25 billion in common stock on May 8.

Tuesday's preferred stock offering was sold to a combination of individual and institutional investors, David Benson, Fannie Mae's Treasurer, said in the statement.

(Reporting by Al Yoon; editing by Gary Crosse;)