FNMA: Fannie Underwater
Fannie Mae, the largest U.S. mortgage- finance company, reported a wider loss than analysts estimated $2.2 vs $3.5 billion,
cut the dividend for the second time in six months and said it needs to raise another $6 billion in capital to stay afloat.
FNMA needs new capital to weather credit and derivative losses that rose 5X to $8.9 vs $1.8 billion a year ago.
Gross unrealized losses on Alt-A & subprime loans $8 vs $3.3 billion; mark to market losses $4.4 vs $3.4 billion;
Credit related expense $3.2 vs $2.9 billion; Combined loan loss reserves $5.2 vs $3.4 billion;
Fair value of net assets dropped to $12.2 vs $35.8 billion...
as mortgage to debt spreads caused a $8.4 billion decline and the fair value of guaranty obligations increased $16 billion.
Common shareholder equity, which measures how much money would be left to stockholders after FNMA pays all its bills...
Fannie sold $7 billion of preferred stock in December which dropped CSE to NEGATIVE $2 billion vs +$20.5 billion in Q4.
Fannie also listed $56.1 billion in so-called Level 3 assets, holdings that are illiquid as no pricing exists, raising Level 3 assets to 16% of total recurring assets.
Fannie Mae said home price declines this year are exceeding its estimates and attributed the larger share of its credit losses to loans in California, Florida, Michigan and Ohio.
The OFHEO said it will lower requirements for surplus capital to 15% from 20% once the money is raised, enabling Fannie to buy more mortgages.
The limit may be reduced to as low as 10% by September if Fannie continues to retain excess capital.
The Nattering One muses... given that Fannie is now worthless to its common stock holders, in fact -$2 billion...
and in the last year investment losses +138%; net fair value losses +673%; credit related expense +910%; income loss +674%; and earnings loss per common share +402%
selling more preferred shares (further dilution) and lowering surplus capital requirements to make more loans, at higher limits $724K...
sounds absolutely brilliant. Don't you think so? At this rate, FNMA, FHLMC & FHA may all be bankrupt within the next five years.
Hattip to Bloomberg.
cut the dividend for the second time in six months and said it needs to raise another $6 billion in capital to stay afloat.
FNMA needs new capital to weather credit and derivative losses that rose 5X to $8.9 vs $1.8 billion a year ago.
Gross unrealized losses on Alt-A & subprime loans $8 vs $3.3 billion; mark to market losses $4.4 vs $3.4 billion;
Credit related expense $3.2 vs $2.9 billion; Combined loan loss reserves $5.2 vs $3.4 billion;
Fair value of net assets dropped to $12.2 vs $35.8 billion...
as mortgage to debt spreads caused a $8.4 billion decline and the fair value of guaranty obligations increased $16 billion.
Common shareholder equity, which measures how much money would be left to stockholders after FNMA pays all its bills...
Fannie sold $7 billion of preferred stock in December which dropped CSE to NEGATIVE $2 billion vs +$20.5 billion in Q4.
Fannie also listed $56.1 billion in so-called Level 3 assets, holdings that are illiquid as no pricing exists, raising Level 3 assets to 16% of total recurring assets.
Fannie Mae said home price declines this year are exceeding its estimates and attributed the larger share of its credit losses to loans in California, Florida, Michigan and Ohio.
The OFHEO said it will lower requirements for surplus capital to 15% from 20% once the money is raised, enabling Fannie to buy more mortgages.
The limit may be reduced to as low as 10% by September if Fannie continues to retain excess capital.
The Nattering One muses... given that Fannie is now worthless to its common stock holders, in fact -$2 billion...
and in the last year investment losses +138%; net fair value losses +673%; credit related expense +910%; income loss +674%; and earnings loss per common share +402%
selling more preferred shares (further dilution) and lowering surplus capital requirements to make more loans, at higher limits $724K...
sounds absolutely brilliant. Don't you think so? At this rate, FNMA, FHLMC & FHA may all be bankrupt within the next five years.
Hattip to Bloomberg.
Comments