WASHINGTON – Fannie Mae said rising delinquencies in its huge mortgage portfolio and massive losses on interest-rate hedges caused it to lose almost $3.6 billion for the fourth quarter.
As a result, the secondary mortgage market giant fell into the red for the year for the first time ever, to the tune of $2.1 billion, or $2.62 a share. That compares to net income of $4.1 billion, or $3.64 a share, for fiscal 2006.
The mortgage giant reported a loss of $3.2 billion on interest-rate hedges, and that it moved an additional $2 billion to loan loss reserves, creating the huge fourth quarter loss.
Credit unions and banks also have been scarred by the turmoil in the mortgage markets and have moved billions of additional funds into loan loss reserves, creating massive losses for them, as well.
Freddie Mac, the other major player in the secondary mortgage market, is expected to report major losses when it releases its fourth quarter and annual financial statements today.
