Fannie Mae reports $2.3bn loss

US backed mortgage lender reports fourth consecutive quarterly loss.

Fannie Mae has been rocked by the US subprime mortgage crisis [AFP]
Fannie Mae has been rocked by the US subprime mortgage crisis [AFP]

The 2.54 dollar per share loss was worse than analysts had predicted.

Freddie Mac also reported losses of $821m.

‘Challenging conditions’

Daniel Mudd, president and chief executive of Fannie Mae, painted a gruesome picture of the current meltdown in the US housing market, but sought to reassure investors that the company was able to carry out its government-sponsored role.

“Our second-quarter results reflect challenging conditions in the housing and mortgage markets that began in 2006 and have deepened through 2007 and 2008,” Mudd said in a statement.

The US congress created Fannie in 1938 and Freddie in 1970 to keep money flowing into the home loan market by buying up mortgages and bundling them into securities for sale to investors worldwide – thereby making home ownership affordable for low- and middle-income Americans.

The companies currently hold or guarantee about $5.3 trillion in home-loan debt, but legally they are required to hold only a fraction of what is mandated for commercial banks as a financial cushion against risk.

Source : News Agencies

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