Fannie Mae on Friday reported a first-quarter loss of $8.7 billion after paying preferred dividends, as credit-related expenses spiked.

Results were an improvement over the $13.1 billion loss the government-sponsored enterprise posted in the first quarter of 2010, but worse than the $2.1 billion loss in the fourth quarter.

Fannie attributed the loss in the most recent quarter primarily to an estimated 1.8% decline in home prices, which drove up credit-related expenses.

Fannie Mae ended the quarter with a net worth deficit of $8.4 billion. The company's regulator, the Federal Housing Finance Agency, has requested $8.5 billion of additional funding from the Treasury Department to plug the deficit.

Fannie Mae's total indebtedness to the government is nearing $100 billion.

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