WASHINGTON — Fannie Mae today reported a third-quarter loss of $29 billion and warned in a filing with the Securities and Exchange Commission that it could have a negative net worth by the end of the year.
Fannie said its net worth fell to $9.4 billion on Sept. 30 from $41.4 billion on June 30.
Should the GSA see a negative net worth, it would be required to obtain funding from the Treasury to avoid receivership.
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Last year at this time, the beleaguered mortgage finance giant posted a loss of $2.3 billion.
Fannie took a $21.4 billion noncash charge during the latest period to establish a valuation allowance against deferred tax assets. The firm had accumulated tax credits that it had expected to reduce taxes in future periods. But the charge reflects Fannie's current expectation that it would not generate enough income in future periods to realize the full value of these assets.
Fannie also took $9.2 billion in credit-related expenses in the third quarter tied to the ongoing deterioration in mortgage credit conditions and declining home prices. The credit-related expenses include foreclosed property expenses and reflect higher charge-offs and increased loss reserves on its book-of-business.
The latest earnings report covers the period in which Fannie and Freddie Mac were seized by their regulator, the Federal Housing Finance Agency.
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