As if $99 billion dollars wasn’t enough? Fannie Mae, the biggest US housing mortgage finances provider, reported today a second-quarter loss of $5.2 billion. The housing financing monster is now asking for an additional $5.1 billion from taxpayers.
Last year’s second-quarter reported a loss of $3.123 billion. Since the US Treasury take-over in 2008, Fannie Mae has needed approximately $104 billion in government capital. The continuing economic crisis and foreclosures have caused US home prices to fall, in turn affecting Fannie Mae.
Fannie Mae says its second-quarter loss “reflects the continued weakness in the housing and mortgage markets.” And with the recent debt deal the finance provider isn’t too optimistic of future earnings, “high levels of unemployment, underemployment and the prolonged decline in home prices since their peak in the third quarter of 2006,” will continue to contribute to its financial troubles.
The housing mortgage finances provider wasn’t always in this bind. Fannie Mae was, for a short time, profitable in the fourth quarter of 2010, reporting income of $23 million.
“I think it’s going to continue to be a bumpy ride for a while,” Fannie Mae Chief Financial Officer Susan McFarland told Reuters. “We’ve got to clear the mortgage market of the excess inventory and employment needs to recover, I believe, before we’re going to see a stabilization of home prices,” he adds.
For the past two years the loans that have been made have proven to be more lucrative for Fannie Mae than loans made during the housing explosion. The loans made between the years of 2005 through 2008 have contributed to $130 billion of losses for the finance group.
Fannie Mae said operating cost associated to mortgage modifications to keep struggling borrowers in their houses has also added to its losses.
Fannie Mae compensated $2.3 billion in dividends to taxpayers in the second quarter, dropping its net capital draw to $2.8 billion; it has paid about $14.7 billion in dividends.