Fannie Mae seeking up to $16 bn from US government

January 27th, 2009 - 9:39 am ICT by IANS  

Washington, Jan 27 (DPA) Fannie Mae, the giant mortgage company under federal control, is to ask for up to $16 billion in federal money to stem massive losses from the mortgage default crisis.The request for an estimated $11-16 billion aims to keep the largest source of US home loan funding alive, and would be its first withdrawal under a programme established last year to keep it and Freddie Mac afloat. The action came in response to an initial look at its fourth quarter financial picture, Washington-based Fannie said Monday.

Freddie Mac Friday asked for another tranche of $35 billion in federal money after already taking $13.8 billion from the US Treasury Department in November.

Treasury officials have pledged up to $100 billion each for Freddie Mac and Fannie Mae. Both are government-chartered firms which finance or buy half of all the nation’s mortgages, estimated at $12 trillion.

In September, the US government seized control of Fannie Mae and Freddie Mac and replaced their executives as the US financial crisis came to a head. It also set up a fund to keep the mortgage giants solvent and has since provided bail-outs to some of the country’s largest financial firms and automakers.

The US mortgage crisis spurred by sub-prime loans to borrowers with poor credit is blamed for sending the country’s financial institutions into a tailspin which then drove the economy into a recession.

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