WASHINGTON – Fannie Mae and Freddie Mac, run under federal conservatorship for the past year, reported massive losses last week for their fiscal third quarters, prompting more calls for government aid.
Fannie Mae reported an $18.9 billion loss for the third quarter and a $56.8 billion loss for the first three quarters of the year and asked for an additional $15 billion in government assistance.
Freddie Mac reported a $6.3 billion loss for the third quarter and a$26.8 billion three-quarter loss, but would not need any additional aid for the time being.
The government has provided more than $112 billion in aid to the two troubled secondary mortgage giants over the past year and has pledged as much as $200 billion in assistance.
The biggest losses for both companies have come from riskier subprime and Alt-A mortgages that they bought and guaranteed at the height of the housing boom in 2006 and 2007. Alt-A loans, for example, account for 9% of all loans guaranteed by Fannie, but represented 39% of all third-quarter credit losses.
But defaults are also rising on loans that were previously seen as lower default risks, including mortgages that originally had lower loan-to-value ratios, went to borrowers with higher credit scores, and carried fixed rates. Fannie said those loans were deteriorating at a faster clip, and helped drive the share of loans that were 90 days or more delinquent to 4.72% at the end of September, up from 3.94% at the end of June. Freddie's serious delinquency rate was lower, at 3.33% in September, up from 2.78% at the end of June.
