Fannie Mae announced plans Thursday to access another $10.7 billion in government aid. The move follows a second quarter earnings report that showed the mortgage giant lost $15.2 billion during the period.
Last year, the government said it would make up to $400 million in aid available to Fannie Mae and Freddie Mac. The two mortgage firms have already accessed a combined $85 billion and Fannie’s latest request would push that figure to nearly $96 billion. Fannie Mae’s share will hit $44.9 billion after receiving the additional funds.
Only American International Group (AIG), the insurer that was nearly on the brink of insolvency in late 2008, has received more in government funds, totaling $182.5 billion. AIG has since begun paying back some of those funds through various asset sales.
With Fannie Mae’s request for additional aid following its latest quarterly loss comes assumption that Freddie Mac may be gearing up to do the same. Freddie Mac is due to release quarterly results on Friday, August 7.
Fannie Mae and Freddie Mac own a nearly 31 million home loans worth about $5.4 trillion, which represents nearly half of all outstanding mortgages in the U.S.
As loan losses continue to pile up with foreclosures still on the rise, relief for both the mortgage companies’ does not seem to be in sight.
RealtyTrac Inc. reported a few weeks back that a record 1.5 million U.S. properties received a default notice or had been seized in the first half of 2009, an alarming 15 percent jump compared to last year.
Fannie Mae’s $15.2 billion second quarter loss dwarfs the $2.6 billion it lost in the same quarter last year. The company was hit with $18.8 billion in credit losses during the period and said almost 4 percent of the loans it owns are delinquent, which is quite a jump from 1.4 percent in the same quarter a year ago.
The second quarter loss marks the eighth straight quarter the company has registered a loss, with the latest essentially forcing Fannie Mae to tap government funds as its net worth has slipped below zero.