Fannie Mae requested another $8.4 billion from the federal government

May 10, 2010
'FNMA - Due to current trends in the housing and financial markets, we continue to expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury…'

Another one of the 'elephants in the room' that our esteemed federal legislative representatives (I use that term very loosely these days - more like career power brokers) ignore. And the heart of the issue falls back to the entitlement mentality - everyone deserves to own their own home, no matter whether they can afford it or not! With Fannie and Freddie leading the way with such risk hungry mortgage underwriting that made getting a car loan look like dealing with the SBA (for those of you who have ever dealt with SBA will know what I mean) in comparison.
And the beat goes on…the continued slide in the stability of the housing market steadily erodes community bank's balance sheets, eats away at the true American Dream, further pushes the envelope of irresponsibility, creates an even higher level of entitlement in the psyche of Americans, creates more blame casting and further divides our country.
The unwinding of the leverage that created the mortgage debacle will take time to work through - as I have said before, when this all started - there is no magic bullet that will instantly put us on the level path to restoration, it took time to get here, it will take time to get back. Yet since we live in the micro wave age, the age of instant gratification, we have our fearless leaders attempting to do just that to appease and assuage us…inevitably creating another potentially deeper crisis down the road.
What do we need? Level headed, future thinking, fiscally responsible leadership.
What will we get? Probably more of what we have had - politically motivated, in the moment thinking, 'open buffet' fiscal policy.
prb

NEW YORK (CNNMoney.com) -- Fannie Mae requested another $8.4 billion from the federal government on Monday, saying that it expects its deficits to continue due to trends in the housing and financial markets.
The government-controlled mortgage giant said it lost $13.1 billion applicable to common shareholders in the first quarter of 2010. In the year-earlier quarter, Fannie suffered a $23.2 billion loss, but an accounting change makes comparing the year-over-year losses difficult.

Fannie's request for more federal funds comes just four days after Fannie's twin Freddie Mac also asked for a handout - to the tune of $10.6 billion - after posting an $8 billion quarterly loss.
In using Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) to prop up the mortgage market, the government in December lifted a $200 billion limit on their bailouts, essentially giving the twin housing lenders a blank check. Fannie Mae has already received $76.2 billion from the federal government and Freddie has gotten $50.7 billion.
"In the first quarter, we continued to serve as a leading source of liquidity to the mortgage market, and we made solid progress in our ongoing efforts to keep people in their homes," Fannie Mae President and CEO Mike Williams, said in a press release.
Fannie's bottom line took a greater hit from credit losses, as it saw the single-family delinuqency rate increase to 5.47%, up from 5.38% in the previous quarter.
While the rate increased, the company said the improved employment picture is at least slowing the pace at which the delinquency rate grows. Mortgages that remain "seriously delinquent" continue to do so for extended periods, the company also said.
As for the future, Fannie said it expects to continue to post losses and ask for government handouts in upcoming quarters.
"Due to current trends in the housing and financial markets, we continue to expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury pursuant to the senior preferred stock purchase agreement," the company's press release said