Fannie Mae and Freddie Mac Work To Raise New Capital

WASHINGTON - Secondary mortgage market giant Fannie Mae priced $7 billion in new preferred shares last week, part of an effort to shore up its flagging finances due to the ongoing mortgage crisis.

The capital measure follows a $6-billion offering last month by Freddie Mac, which has also reported troubled finances.

Fannie Mae’s offering, its largest ever, was priced with an 8.25% dividend.

Fannie reported a $1.4-billion loss for the third quarter and could lose as much as $4 billion for the year, according to analysts.

Freddie Mac reported a $2-billion loss for the third quarter and predicted additional losses for the fourth quarter.

Both mortgage companies predicted broader losses over the next few years as the mortgage crisis continues to play out. Freddie Mac CEO Richard Syron said in an interview last week he expects his company to report as much as $10 billion more in credit losses over the next few years.

In a separate interview, Daniel Mudd, CEO of Fannie Mae, said they don’t expect the nation’s mortgage market to recover from its current woes until 2010. (c) 2007 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved. http://www.cujournal.com http://www.sourcemedia.com