Fannie Mae warns of insolvency
US mortgage giant says government bailout may not be enough to keep it afloat.
The loss amounted to $13 per share, compared with a second-quarter loss of $2.3 billion loss, or $2.54 per share.
Housing crisis
Both Fannie Mae and its sister mortgage titan, Freddie Mac, were seized by the US government on September 7 this year in a bid to avert a financial system meltdown from a credit crunch and housing slump.
The two government-sponsored but shareholder-owned enterprises underpin about half of the US home-loans market.
Both have been hit hard by the nation’s slumping housing market – a crisis sparked by the sub-prime loans scandal, when people were granted mortgages they found they were unable to pay.
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.