HILL BRIEFS

Fannie Mae Loses $2.2B In First Quarter

Tue. May 6, 2008


Finance. Fannie Mae reported losses of $2.2 billion in the first quarter and the nation's largest buyer of home loans said today it would cut its dividend and raise $6 billion in new capital, with expectations that the housing slump will persist into next year, the Associated Press reported. Home prices fell faster in the first quarter than Fannie Mae had expected, the government-sponsored company said, and it will open a $4 billion share offering immediately, with the remainder being offered in the "very near future." Fannie Mae's federal regulator, the Office of Federal Housing Enterprise Oversight, announced today that following the stock sale, it will cut the capital surplus cushion the company has to maintain by 5 percentage points to 15 percent. The government has come to rely increasingly on Fannie Mae and Freddie Mac as other lenders have shied away from the risk-heavy market for mortgage securities.