subject: The Health Of Fannie Mae Is Closely Linked With Containment Of Foreclosures [print this page] The health of Fannie Mae is closely linked with containment of foreclosures. Fannie Mae is under federal control and assistance since last year. It wants another $19 billion as capital investment and said that its long term health depended on continued funding by the government. In March 31st Fannie took $15.2 billion as aid according to is filings made with Securities and Exchange Commission.
In the first quarter of 2009 Fannie Mae suffered increased losses touching $23.2 billion. For the second time its net worth share dropped to less than zero. The quality of the various loans and mortgages Fannie owns and provides guarantee for, fell below standard thanks to the continued recession. The government has forced it to either refinance or modify the loans of those borrowers who are in trouble.
In the filing Fannie Mae stated, Future activities that our regulators, other U.S. government agencies or Congress may request or require us to take to support the mortgage market and help borrowers may contribute to further deterioration in our results of operations and financial condition.
The steps taken by the government have not as yet been able to have an impact on foreclosures the numbers continue to swell after the close of the moratorium period. During the first quarter of this year 803,489 came under the cloud of foreclosures either as defaults, auctions or bank repossessions. It was 24% greater than 2008.
Simultaneously jobs are being slashed by employers as temporary measures to halt foreclosures came to a halt.
Almost half of all the mortgages in USA are either owned or guaranteed by Fannie Mae and Freddie Mac. Last September they were taken over by the regulators because of staggering losses. In February 2009 its capital was increased by $100 billion each by the government purchasing stocks. At that time its assets were less than its commitments. But the problem remains unresolved and Fannie Mae claims that for long term sustainability it needs more funds.
Freddie Mac took $13.8 billion in November and $30.8 billion in March. Fannie Mae claims that the difference between its assets and its liabilities dropped to minus $18.9 billion on 31st March. Previous it was minus $15.2 billion.
The duo Fannie Mae and Freddie Mac account for mortgages worth $5.3 trillion of the $12 trillion residential loan market. When the feds took over control the management was changed but till now nothing positive is showing up.
