.4 billion in government aid. Fannie Mae has been in government conservatorship for some time. Its losses have grown almost exponentially, and have posted the 12th consecutive quarterly loss. Either the fast money from taxpayers did no good, or they are in deeper trouble than once believed.
Fannie Mae posts 12th consecutive loss
Fannie Mae has operated at a loss for the 12th quarter in a row. They have lost $ 148 billion over that time. That’s almost the very same amount as the entire economy of Chile. Fannie Mae and Freddie Mac have not been able to bounce back as quick as many Wall Street firms. According to the Wall Street Journal, Fannie Mae losses amount to $ 11.5 billion, compared with first quarter of last year, which saw a loss of $ 23.
Fannie Mae under government control
In 2008, as the housing recession threatened to collapse the entire U.S. financial system, Fannie Mae and Freddie Mac were both placed in conservatorship. Essentially, they were seized by the Federal government because they couldn’t stop losing money. Fannie Mae had assumed the risk for many mortgages, and as more defaulted, the losses went up and up. A recent article on CNN Cash reports that the rate of foreclosure has slowed in some areas, but still managed to rise by 16 percent.
Impact
Both Fannie Mae and Freddie Mac are prime movers in mortgage loans for the U.S. and they hold trillions in mortgage assets. Some of those assets have become toxic. Mortgage loan modification will only do so much, and when mortgages end up underwater every person loses money . If the rate of foreclosures doesn’t slow down, obtaining a mortgage loan could be hard even for Croesus.
The silver lining
The Journal also reported Fannie disclosed that 5.47 percent of their loans were 90 days past due. In February, it had been 59 percent. These are modest gains beginning to take place. The problem then becomes how long before small gains aggregate into a positive force overall.
Citations
Wall Street Journal
http://online.wsj.com/article/SB10001424052748703880304575236030191182938.html?mod=WSJ_Commodities_RIGHTMoreInMarkets
CNN Money
http://money.cnn.com/2010/04/29/real_estate/worst_foreclosure_markets/index.htm
