Fannie Mae Raises Funds
WASHINGTON -- Fannie Mae, the government sponsored enterprise that buys more home loans than any other entity, defied the markets by posting a quarterly loss May 5 of $2.2 billion. The Fannie Mae tempered the bad news with some good: It pledged to raise an additional $6 billion from investors to buy more mortgages from credit unions, banks and other lenders.
Coming off an announcement from the Office of Federal Housing Enterprise Oversight, Fannie Mae's regulator, that it had lifted restrictions placed on Fannie Mae after an accounting scandal two years ago, the news bolstered confidence in Fannie, and the its stock price climbed.
Mortgage industry officials see Fannie now in a good position to help more homeowners by buying loans from lenders that have held back credit in the ongoing crunch, which has been led by losses in the housing sector, declining home values and increasing foreclosures.
The Oversight Office also reduced the capital reserves required of Fannie Mae, another move seen as enabling it to lend more. Increased stability and liquidity to the nation's housing finance system, coupled with recent news of lower than expected unemployment figures may calm fears of high gas and food prices, it is hoped.
Fannie Mae President Daniel Mudd said that further losses are expected until the spiral of foreclosures and depressed home prices stabilizes.