3rd UPDATE:Fannie Swings To 4Q Loss On Rise In Credit-Related Expenses
29 Febbraio 2012 - 8:51PM
Dow Jones News
Fannie Mae (FNMA) will request another $4.6 billion in U.S.
government aid after posting a $2.41 billion loss in the fourth
quarter, the mortgage-finance company said Wednesday.
The company also warned it could have to request additional aid
stemming from an escalating battle with Bank of America Corp. (BAC)
over mortgage-repurchase requests for faulty loans.
Bank of America said last week in a regulatory filing it had
stopped selling most mortgages to Fannie Mae because of a "mutual"
end to an agreement between the two companies. But Fannie Mae said
Wednesday it decided not to renew the agreement at the end of
January after the bank resisted requests to repurchase soured
loans.
"If Fannie Mae collects less than the amount it expects from
Bank of America, Fannie Mae may be required to seek additional
funds from Treasury," Fannie Mae said.
A spokesman for Bank of America on Wednesday referred to the
bank's filing when contacted for comment.
The "nonrenewal" of the agreement between Bank of America and
Fannie Mae was partly the result of "our ongoing differences with
[Fannie Mae]" over repurchase claims, the Charlotte, N.C., bank
said in its annual report last week.
The volume of Fannie Mae's outstanding repurchase requests with
Bank of America "increased substantially" as a result of the bank
slowing its loan buybacks, according to Fannie Mae.
Bank of America accounted for the largest portion, about 52%, of
Fannie Mae's outstanding repurchase requests as of Dec. 31. The
other banks that accounted for large amounts of outstanding
requests are J.P. Morgan Chase & Co. (JPM), Citigroup Inc. (C),
Wells Fargo & Co. (WFC) and SunTrust Banks Inc. (STI).
Bank of America can still deliver loans to Fannie Mae under
certain refinancing programs. Fannie Mae said it doesn't expect the
issue to have a material impact on its results.
The mortgage-finance company blamed its quarterly loss primarily
on pre-2009 loans and declines in home prices, which pushed up the
company's credit-related expenses.
In the fourth quarter of 2010, Fannie Mae posted a slight profit
to snap a streak of 13 straight quarterly losses, though the
company resumed its place in the red in the following quarter and
every one since.
Fannie Mae and sister company Freddie Mac (FMCC) don't lend to
consumers. Rather, they buy and guarantee home loans that meet
their standards and package them into securities.
The two firms were taken over by the government in 2008 at the
height of the financial crisis. The companies' shares began trading
on the over-the-counter market in 2010 after regulators ordered
them to delist from the New York Stock Exchange because they no
longer met listing standards.
Including its most recent request from the U.S. Treasury
Department, Fannie Mae has borrowed more than $116 billion from
taxpayers and paid back $19.6 billion in dividends. Freddie Mac,
which hasn't yet reported its latest quarter of earnings, has
received more than $71 billion in government aid and paid back
about $15 billion as of the third quarter.
The net cost to taxpayers for the rescues of both companies
stands at more than $152 billion.
Fannie's annual net loss of $16.9 billion exceeded its
year-earlier loss of $14 billion largely because falling interest
rates triggered write-downs of certain derivative investments that
are used to hedge against swings in interest rates.
Company officials said lower rates of mortgage delinquency had
allowed the company to set aside less cash for loan losses during
the second half of 2011. "That's a good indication that we believe
we now have most of the losses already recognized," said Susan
McFarland, Fannie's chief financial officer, in an interview.
For the fourth quarter, Fannie posted a loss of $2.41 billion,
compared with a year-earlier profit of $73 million. Net revenue
declined 7.3% to $4.53 billion.
The firm's credit-related expenses totaled $5.51 billion in the
fourth quarter, compared with $4.32 billion a year earlier and
$4.88 billion in the third quarter.
-By Andrew R. Johnson, Dow Jones Newswires; 212-416-3214;
andrew.r.johnson@dowjones.com
--Mia Lamar, Nick Timiraos and Matthias Rieker contributed to
this article.
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