WASHINGTON--Mortgage bridging finance company Fannie Mae (FNM)said Thursday it needs $15.2 billion in government aid to make up for losses from the slumping U.S. housing market.
The mortgage finance company, seized by federal regulators in September, posted a loss of $25.2 billion, or $4.47 per share, in the fourth quarter.That compares with a loss of $3.6 billion, or $3.80 a share, in the year-ago period.
Fannie's net worth -- the value of its assets minus the value of its liabilities -- fell below zero at the end of the quarter, forcing the company to request funding from the government for the first time.
The Treasury Department, after seizing control of Fannie Mae and sibling company Freddie Mac (FRE) last fall, pledged up to $100 billion in aid for each company, the largest buyers and backers of U.S. home loans.
Last week, the Obama administration expanded that promise to $200 billion each -- money that's separate from the $700 billion financial industry rescue fund.
Treasury Secretary Timothy Geithner said last week that the beefed-up backing is "not a judgment about the expected losses ahead. It's just a way to make sure people understand that they will be able to play this role going forward."
Fannie Mae said its fourth-quarter loss was driven by $12 billion in credit losses due to declining housing market conditions, $12.3 billion in losses on derivatives and $4.6 billion in writedowns of the value of its mortgage-backed securities.
"We expect economic conditions and falling home prices to continue to negatively affect our credit performance in 2009, which will cause our credit losses to increase," Fannie Mae said in a Securities and Exchange Commission filing.
If the recession deepens, the company said, "more borrowers will be unable to make their monthly mortgage payments, resulting in increased delinquencies and defaults, sharper declines in home prices and higher credit losses."
Sibling company Freddie Mac has said it's likely to require as much as $35 billion in federal support on top of the $13.8 billion it received last year.
The Obama administration also said earlier this month it will continue purchasing mortgage-backed securities from them and would allow each company to hold an additional $50 billion in mortgage securities as investments, expanding their combined portfolios to a total of $1.8 trillion.
Taken together, Fannie and Freddie own or guarantee almost 31 million home loans worth about $5.5 trillion. That's more than half of all U.S home mortgages.
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