Fannie Mae posted a net loss of $5.2 billion in the second quarter and Friday morning requested that the Treasury Department provide it with $5.1 billion of additional funds to keep its capital position in the black.
Of the $5.2 billion that it lost, $2.3 billion represents a quarterly dividend payment to Treasury which controls its preferred stock.
The GSE – a ward of the government for almost three years now – blamed its problems on credit-related losses from defaults and foreclosed properties.
Still, there was some positive news in the earnings release: credit losses fell by 36% in 2Q to $6 billion. Also, 47% of its current book of business includes mortgages funded since early 2009 with the GSE predicting that these loans will be “profitable” over their lifetime.
Meanwhile, charge-offs on foreclosed properties fell to $3.9 billion compared to $5.7 billion in the first quarter.
Fannie acquired 53,700 of foreclosed properties in the quarter and sold 71,200 REOs during the reporting period.
The biggest drag on earnings was $1.6 billion of fair market value losses on its derivatives, compared to a $300 million gain in the first quarter. Fannie attributed the hedging loss to falling interest rates.