Fannie, Freddie Looking At Big Losses In Gulf
Among the biggest losers financially from the two recent hurricanes to hit the Gulf Coast, are Fannie Mae and Freddie Mac, which are holding the paper for billions of dollars in uninsured home loans in the affected areas.
Fannie Mae reported it expects hurricanes Katrina and Rita to lead to as much as $550-million in after-tax losses for the third quarter. Fannie said storm-related losses on home mortgages it holds in its portfolio, on mortgage-backed securities it guarantees, and on property it owns in the affected areas, could range from $250 million to $550-million, based on its assessment of damages and exposure in the hurricane-affected areas.
Those figures could be increased or reduced as more or better information emerges about the extent of the damages in the Gulf Coast, Fannie said.
Freddie Mac estimated smaller, but still substantial storms-related losses of between $150 million to as much as $300 million. Both loss estimates are after-taxes.
The two secondary market companies are believed to be holding as much as $15 billion worth of mortgages or mortgage-backed securities in the storm-wrecked areas.
Watch for loss estimates coming from other big mortgage holders, like Countrywide Financial, Wells Fargo or Washington Mutual, over the coming weeks as companies report their third quarter financials.