WASHINGTON – Troubled secondary mortgage market giant Fannie Mae yesterday reported it lost another $2.2 billion in the first quarter, forcing it to seek another $6 billion with a share offering and to cut its quarterly dividend.
The biggest buyer of residential mortgages reported a $3.6 billion loss for the fourth quarter and a $2.1 billion loss for 2007.
The company said it expects "severe weakness" in the housing market to continue this year, bringing increased mortgage defaults and foreclosures.
The rising losses come as increasing numbers of institutions are exiting the secondary market for residential mortgages, leaving Fannie Mae and Freddie Mac with a growing share of the market, estimated at 80% for the first quarter. Freddie Mac also is expected to report a large loss when it releases its first quarter earnings later this week.
Fannie reported continued loan losses caused by problems in the housing market. It raised its loan loss reserves to $5.2 billion from $3.4 billion three months earlier. At the end of the quarter, about 1.15% of single family homes it backs were seriously delinquent. That’s up 17% from the 0.98% that were that far behind at the end of 2007.
It also announced that the fair value of its net assets plunged to $12.2 billion at the end of the quarter, from $35.8 billion at the start of the period. It blamed market volatility and home price declines for that fall. Its mark-to-market losses rose to $4.4 billion in the quarter from $3.4 billion in the fourth quarter.
