Fannie, Freddie to Report Third Straight Loss on Credit Costs

Bloomberg (05/05/08) ; Shenn, Jody; Kopecki, Dawn
Fannie Mae and Freddie Mac are each expected to post losses for the third consecutive quarter amid the worst housing slump in decades. The two government-sponsored enterprises (GSEs), which own or guarantee 40 percent of the $12 trillion in U.S. residential mortgages, are reeling from record home foreclosures and delinquencies that have pushed their stocks down more than 50 percent in the past year. According to a recent Bloomberg poll of analysts, the GSEs may each need to raise as much as $15 billion in capital after more than $9.4 billion of mortgage-related losses. Fannie Mae CEO Daniel Mudd and Freddie Mac CEO Richard Syron agreed two months ago to raise capital after the Office of Federal Housing Enterprise Oversight (OFHEO) permitted the companies to add more assets in an effort to pump cash into the housing market and promote lending. OFHEO Director James Lockhart said in March the companies may need $10 billion each.