WASHINGTON (Reuters) - The government’s mortgage buyer Fannie Mae on Friday sought a further $5.1 billion from taxpayers, as the Obama administration struggled to keep Americans in their homes.
With high unemployment and foreclosures expected to put more downward pressure on home prices, the government’s efforts to help the housing market has had little impact.
Federal housing authorities said it had “much more work to do to help the market recover and to reach the many households...across the nation who still face trouble.”
Under the administration’s premier housing program that provides financial incentives for banks to help borrowers rework their loans, nearly 32,000 homeowners won lower mortgage payments in June.
So far that program has provided 763,071 borrowers with permanent loan modifications, far fewer than the administration’s initial goal of helping up to four million homeowners.
The administration has been mulling ways to help the housing market and recently unveiled plans to give unemployed borrowers and their bankers more time to delay home foreclosures.
But economists see little relief ahead.
“The housing market problem is simple - too much supply against demand,” said Steve Blitz, senior economist with ITG Investment Research in New York. “The weak economy has made lots of people anxious to sell but they are holding off waiting for a better bid.”
Earlier on Friday, the largest U.S. residential mortgage funds provider reported a second-quarter net loss attributable to common shareholders of $5.2 billion, or 90 cents per share.
Fannie Mae said its second-quarter loss “reflects the continued weakness in the housing and mortgage markets” as well as expenses related to mortgage modifications to keep struggling borrowers in their homes.
Continued economic weakness and mounting foreclosures have caused U.S. home prices to fall this year, and it is unclear when they will finally bottom.
“I think it’s going to continue to be a bumpy ride for a while,” Fannie Mae Chief Financial Officer Susan McFarland told Reuters. “We’ve got to clear the mortgage market of the excess inventory and employment needs to recover, I believe, before we’re going to see a stabilization of home prices,” she said.
Fannie Mae and sister entity Freddie Mac were seized by the government in September 2008 as losses mounted from mortgages gone bad. To stay solvent, the two firms together have needed about $169 billion in taxpayer bailout funds, including Fannie Mae’s latest request. Their net capital draw has been about $143 billion after paying back dividends to the U.S. Treasury.
Editing by Chizu Nomiyama