Remember Fannie Mae? It seems like ages ago now, but last spring and summer the company was still insisting that it was in great shape…right up until the time the Feds seized it. Now, after taking a $29 billion loss yesterday, Fannie is speaking straight from the gut:
WSJ: Fannie’s loss for the latest quarter worked out to $13 a share. A year earlier, Fannie surprised investors with what then seemed like a huge loss of $1.56 a share.
Fannie said its net worth totaled $9.4 billion as of Sept. 30, down from $41.4 billion three months earlier. To remain in business, Fannie would need funding from the Treasury if its net worth fell below zero. Fannie said that may happen “if current trends in the housing and financial markets continue or worsen…”
In 4 p.m. composite trading Monday on the New York Stock Exchange, Fannie stock fell two cents to 72 cents a share. The company’s shares traded at a 52-week high of $50.44 last Nov. 14.
Fannie is struggling to sell foreclosed homes as their prices drop. Its inventory of single-family foreclosed homes on Sept. 30 was 67,519, up from 54,173 three months earlier and 33,729 at the end of 2007. Net sales prices for foreclosed homes fell to an average of 70% of the unpaid loan balance in the latest quarter, compared with 78% in 2007.
Borrowers are falling behind as job losses prevent some from paying and falling home values discourage others from trying. At the end of the quarter, nonperforming loans totaled $63.6 billion, or 2.2% of mortgages guaranteed by Fannie, up from 1.6% as of June 30.
California accounted for about 31% of Fannie’s single-family credit losses in the third quarter, while Michigan accounted for 11%, Florida for 10% and Arizona for 9%.
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