* 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 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
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
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
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
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.