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Fannie seeks up to $16b

Bloomberg News / January 27, 2009

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WASHINGTON - Fannie Mae, the largest source of money for US home loans, said yesterday it will need to tap as much as $16 billion in emergency funds from the Treasury Department to stay afloat as deterioration in the housing market persists.

Fannie's planned request follows one from Freddie Mac, which said Jan. 23 that it will need as much as $35 billion more in federal aid. Unprecedented mortgage losses drove the net worth of both companies below zero last quarter, they said in separate securities filings.

This will be Fannie's first draw on a $200 billion emergency fund set up by Treasury in September to keep the government-sponsored enterprises solvent. Fannie said losses on mortgage loans and a decline in the market value of its assets accounted for the shortfall in the fourth quarter.

Freddie and Fannie own or guarantee $5.2 trillion of the $12 trillion mortgage market.

Freddie, which received $13.8 billion in November, will have used about half of its $100 billion lifeline from Treasury once it receives its second capital injection.

© Copyright 2009 Globe Newspaper Company.