No business could ever survive, much less pay its executives the $110 million that Clinton cronies got paid for collapsing the two mortgage giants, except the two government run giants...products of the usual government incompetence!
Fannie Mae, the mortgage-finance company under federal conservatorship, said it will seek $15.3 billion in aid from the U.S. Treasury after posting a 10th straight quarterly loss. Why can't we all qualify to receive this never ending government handout?
A fourth-quarter net loss of $16.3 billion, or $2.87 a share, pushed the company to request its fifth draw on an unlimited lifeline from the government, Washington-based Fannie Mae said in a filing today with the Securities and Exchange Commission.
Fannie Mae, which posted $120.5 billion in losses over the previous nine quarters, has taken $59.9 billion in federal aid since April. Its shares, which peaked at $87.81 in December 2000, closed at 99 cents today in New York Stock Exchange composite trading. The Treasury owns 79.9 percent of Fannie Mae’s outstanding common shares.
Washington-based Fannie Mae, which owns or guarantees about 28 percent of the $11.8 trillion U.S. home-loan market, has been hobbled by a three-year housing slump that wiped 28 percent from home values nationwide and led to record foreclosures. Fannie Mae lost $74.4 billion for the 12 months ended Dec. 31, compared with $59.8 billion in 2008.
“Our financial results for 2009 reflected the continued adverse impact of the weak economy and housing market, which has resulted in record mortgage delinquencies and contributed to our recording significant credit-related expenses and net losses during each quarter of the year,” Fannie Mae said in the filing today.
Fannie Mae’s borrowings from Treasury will total $76.2 billion after the next payout, carrying with it an annual dividend cost of $7.6 billion, which the company said it will repay by borrowing more money from the Treasury. “This amount exceeds our reported annual net income for all but one of the last eight years, in most cases by a significant margin,” the company said.
The company said the ability to tap continuing cash infusions from the Treasury this year “is critical to keeping us solvent and avoiding the appointment of a receiver.”
The loss in the fourth quarter was driven in part by a $5 billion writedown on low-income housing tax credits that the Treasury Department barred the company from selling. Rival Freddie Mac took a $3.4 billion charge for the same reason.
These two losers are competing on who will achieve the larger loss, as their management honchos get paid millions and actually get "bonus" payments for their performance!
Losses at Fannie Mae are likely to grow with rising unemployment and costs to implement President Barack Obama’s plans to reduce foreclosures, the company said.
Let me understand this...Obama's plan to reduce foreclosures will grow the losses, what type of lunacy is this plan????
Fannie Mae and McLean, Virginia-based Freddie Mac survived last year on investments the government made in the companies after regulators put them in conservatorship in September 2008. The Treasury on Christmas Eve removed a $200 billion limit on each company, extending unlimited backing through 2012.
The two companies own or guarantee more than $5 trillion in U.S. residential debt, and were responsible for as much as 75 percent of the new mortgages made last year.
This is happening because with the artificially low interest rates, nobody in his right mind would want to own 30 year mortgages that pay 4%-5%...DUH! This is NOT a reasonable market rate for mortgages with such high risk. If mortgage rates were not artificially held down by government fiat, these organizations would not have to guarantee them, as market forces would be at work.
For instance, when I last refinanced my mortgage, I opted for the then available no doc, no income mortgage loan, and with that I was prepared to pay and paid a higher rate for the privilege of obtaining a loan with minimum documentation. This did not render my mortgage loan any less value, but instead provided the owner of that note, a higher rate of interest inherent with the lesser documentation, and allowed me to choose that option for that privilege.
A record 3 million U.S. homes will be repossessed by lenders this year as unemployment and depressed home values leave borrowers unable to sell or make their house payments, according to a RealtyTrac Inc. forecast last month. Last year there were 2.82 million foreclosures, the most since the Irvine, California-based company began compiling data in 2005.
Fannie Mae and smaller rival Freddie Mac were chartered by the government primarily to lower the cost of homeownership by buying mortgages from lenders, freeing up cash at banks to make more loans. The companies make money by financing mortgage-asset purchases with lower-cost debt and by charging fees to guarantee securities they create out of home loans from lenders.
Fannie Mae’s net worth, or the difference between assets and liabilities, was negative $15.3 billion as of Dec. 31, compared with negative $15 billion on Sept. 30 and negative $10.6 billion on June 30, according to company statements.
For the fourth quarter, Fannie Mae decreased reserves for future credit losses to $64.9 billion last quarter from $65.9 billion in the previous quarter.
The amount of nonperforming loans that Fannie Mae guarantees for other investors rose to $174.6 billion from $163.9 billion in the third quarter, according to the filing. Fannie Mae also owned $41.9 billion in non-performing loans as of Dec. 31, up from $34.2 billion in the third quarter.
The fair value of Fannie Mae’s assets was negative $98.8 billion last quarter, compared with negative $90.4 billion at the end of September.
The Obama administration will wait until next year to seek legislation that addresses the future of Fannie Mae and Freddie Mac, Treasury Secretary Timothy F. Geithner told the House Budget Committee on Feb. 24.
“We are going to propose reforms to the Congress next year to try to make sure we bring about fundamental change in the housing market and get ourselves in a position where the government is playing a less risky, but more constructive role in supporting housing markets,” Geithner said. “That’s going to be a difficult set of reforms.”
The Treasury and the companies’ regulator, the Federal Housing Finance Agency, blocked Freddie Mac and Fannie Mae from selling their low-income housing tax credits, which can only be recognized if the companies expect to be profitable.
The Treasury found that an agreement Fannie Mae had to sell about half of its credits would have cost taxpayers more than the company would gain from the deal, according to a November letter to that company.
Why do we need these corporations to continue to lose our money? If we simply let market forces operate the markets would provide for a "market based" mortgage trading system which would provide real world market pricing, we as taxpayers would not suffer ANY losses...investors who want to take the risk would take the risk and any losses...they take that market risk based on the fees/interest they receive.
Does market based mortgage trading make more sense than constantly having to make good on bad borrowers mistakes?
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