Fannie Asks Taxpayers for $4.6B After More Losses
Mortgage giant Fannie Mae said Wednesday that it lost money in its fourth quarter and is asking the federal government for $4.57 billion in aid to cover its deficit.
Washington-based Fannie said it lost $2.41 billion in the October-December quarter, stung by declining home prices. Revenue was $4.53 billion.
The government rescued Fannie and sibling company Freddie Mac in September 2008 to cover their losses on soured mortgage loans. Since then, a federal regulator — the Federal Housing Finance Agency — has controlled their financial decisions.
Taxpayers have spent more than $150 billion to prop up Fannie and Freddie, the most expensive bailout of the 2008 financial crisis. The government estimates that figure could top $259 billion to support the companies through 2014 after subtracting dividend payments.
Fannie has received more than $116 billion so far from the Treasury Department, the most expensive bailout of a single company.
Fannie officials say losses have increased in recent quarters for two reasons: Some homeowners are paying less interest after refinancing at historically low mortgage rates; others are defaulting on their mortgages.
When property values drop, homeowners default, either because they are unable to afford the payments or because they owe more than the property is worth. Because of the guarantees, Fannie and Freddie must pay for the losses.