- The Washington Times - Friday, August 7, 2009

Fannie Mae, the mortgage finance company taken over by the government, asked the U.S. Treasury for a $10.7 billion capital investment as an eighth straight quarterly loss drove its net worth below zero again.

A second-quarter net loss of $14.8 billion ($2.67 a share) pushed the company to request money for the third time from a $200 billion government lifeline, Washington-based Fannie Mae said in a filing Thursday with the Securities and Exchange Commission.

The latest results bring the company’s cumulative losses over the past two years to $101.6 billion and will bring its total draw on the Treasury to $44.9 billion since April.

The credit quality of loans and mortgage bonds that Fannie Mae owns or guarantees has deteriorated as a recession that began in December 2007 pushed more homeowners into foreclosure. A record 1.5 million U.S. properties received a default or auction notice or were seized in the first half of this year, 15 percent more than a year earlier, as employers cut jobs and temporary programs to assist homeowners came to an end, RealtyTrac Inc. said July 16.

Fannie Mae said it expects the quality of its assets to worsen further and to continue accumulating losses as it executes President Obama’s efforts to modify or refinance loans for as many as 9 million homeowners.

“We do not expect to operate profitably in the foreseeable future,” the company said in its filing. “We expect that we will experience adverse financial effects as we seek to fulfill our mission by concentrating our efforts on keeping people in their homes and preventing foreclosures.”

Fannie Mae and smaller competitor Freddie Mac, which own or guarantee almost half of U.S. residential mortgage debt, are integral to the president’s plan to help homeowners. In February, the government doubled its emergency commitment for each company from $100 billion, which the Treasury makes through preferred stock purchases.

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