Fannie Mac seeks $7.8 bn aid from US government
November 9th, 2011 - 1:59 pm ICT by IANSWashington, Nov 9 (IANS) Fannie Mac, one of the two major US mortgage-finance companies, has said it will request a $7.8 billion aid from the US government after posting huge losses in the third quarter.
The government-backed company, confronted with a weak housing market, Tuesday reported a net loss of $5.1 billion in the third quarter of 2011, much more than a net loss of $2.9 billion in the previous quarter, reported Xinhua.
The main reason for the increased net loss reflected the credit-related expenses and fair value losses due to further declines in interest rates, said the mortgage giant in a financial report, adding that continued weakness in the housing market and the economy overall had a significant impact on its derivative losses.
The Federal Housing Finance Agency (FHFA), along with Fannie Mae and Freddie Mac, outlined a series of changes to the Home Affordable Refinance Program (HARP) in October, to save homeowners’ money by refinancing their mortgage loans with the current lower interest rates.
The company also paid a quarterly dividend of $2.5 billion to the Treasury Department as prescribed in Senior Preferred Stock Purchase Agreement, compared with $2.3 billion in the previous quarter.
To offset the deficit of $7.8 billion as of Sep 30, 2011, Fannie Mac will seek the same amount aid from the Treasury, pushing the aggregate government support funding up to $112.6 billion.
Fannie Mae and Freddie Mac have survived on Treasury aid since September 2008, when they were put under conservatorship by the federal government after suffering from the collapse of the subprime mortgage market.
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Tags: conservatorship, declines, fannie mac, fannie mae, fannie mae and freddie mac, fhfa, freddie mac, government support, harp, housing finance agency, housing market, mortgage finance companies, mortgage loans, preferred stock, quarterly dividend, significant impact, stock purchase agreement, subprime mortgage market, treasury department, xinhua