Fannie Mae is the nation’s largest mortgage finance company and it’s just not doing too well, says the AP. Increasing losses from foreclosures are wiping out Fannie’s revenue.
…expenses related to foreclosures and other credit losses increased to $5.3 billion from $3.2 billion in the previous quarter. And the company signaled that those losses would probably accelerate.
The loss “is a reflection of the extraordinary pressures at work in the housing and mortgage markets,” Fannie Mae’s chief financial officer, Stephen M. Swad, said in a statement. “The credit picture remains very difficult.”
“We estimate that average home prices declined by 6 percent on a national basis during the second quarter of 2008, which translates to an 8 percent total national decline since the beginning of the downturn in the second quarter of 2006.”
Two days ago Freddie Mac, the second largest lender, told investors that it had experienced a loss that was 3 times what they were expecting.
Fannie Mae says they will stop offering Alt-A mortgages and cut operating costs by 10%.