Fannie Mae Declares $3.6 Billion Loss in the Fourth Quarter of 2007! by Milota Sidorova

Just after the government allowed Fannie Mae, the largest buyer and backer of U.S. home loans along with Freddie Mac, its chief rival to expand in the vibrant mortgage market, another black bug has come out. Fannie Mae has released long expected annual fiscal report. Assumed loss forecast has become a true, maybe even worse. Loss of almost $3.6 billion in the fourth quarter of 2007 & that is a score of The Federal National Mortgage Association (FNMA) (NYSE: FNM), generally known as Fannie Mae, a government sponsored enterprise. No. 2 in housing market, Freddie Mac is expected to declare a loss of $1.5 billion next Thursday. Fannie Mae explains the constant decrease by mounting of home-loan deliquencies and lowering the interest rates. It' s not that long ago, since America had dated back the multi-billion accounting scandals at the government-sponsored companies ( GSC ) and yet another rescue promise has shined up. The Office of Federal Housing Enterprise Oversight cheered failling mortgage giants with a promise to remove the combined $1.5 trillion cap on Fannie's and Freddie's mortgage holdings. The announcment should be officialy confirmed right in a few days, on March 1. Reporting more than double loss comparing to 3Q 2007, Daniel Mudd, the president and CEO of Fannie Mae declared: "The housing conditions are serious and they've gotten worse." During the conference with analysts he slated difficulties for following year 2008. Analysing the situation, let' s resume the possibilities. If market condtions maintain or even worse, the company will be forced to raise new capital. This can achieve by selling off deposit investements, providing another sale of special stock or dropping even eliminating its dividend. In an efffort to maintain the companies ability to operate, government claimed to keep 30 per cent more capital in reserve, that is by the way, the minimal legal requirement. Fannie and Freddie will have to raise its capital, by the most possibily, cutting dividends. "The question becomes do they have the capital to maintain a larger portfolio?" quoted Bert Ely, a banking consultant based in Alexandria, Va. Dancing on the edge of the knife, Fannie will have to accept the government' s obligation. Following Mudd' s speech, reestablishing the capital, will be the most important aim of the company.

related story: http://news.yahoo.com/s/ap/20080227/ap_on_bi_ge/earns_fannie_mae;_ylt=Al3kbcBlZI.1BzQ9YB6FtaWs0NUE

by Milota Sidorova for PocketNews (http://pocketnews.tv)

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