We're doomed. Doomed!
DOOMED!!!
Posted on 11/09/2007 8:53:32 AM PST by Hydroshock
WASHINGTON - Fannie Mae's third-quarter loss more than doubled to $1.4 billion, reducing year-to-date profits by more than half, as credit losses and mounting mortgage delinquencies sour its outlook into 2008, the company said Friday.
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Shares of Fannie Mae, the largest U.S. buyer and backer of home loans, sank more than 9 percent in morning trading.
Fannie Mae posted a loss equivalent to $1.56 a share, in the tumultuous July-September quarter, compared with a loss of $629 million, or 79 cents per share, a year earlier.
Fannie Mae said it expects the housing downturn to continue into 2008, shrinking home prices by 4 percent and decreasing demand for mortgages.
Fannie Mae's results clearly showed the ravages of the collapse in high-risk mortgages and ensuing credit crisis of last summer, which rattled global markets, forced more than 50 lenders into bankruptcy and recently battered Wall Street powerhouses Merrill Lynch & Co. and Citigroup Inc.
The results also marked a significant milestone for Fannie Mae: They brought the company current in its financial reporting for the first time since 2004, when a massive accounting crisis tarnished its reputation and swept the top executives from office.
From January through September, the government-sponsored company said it earned $1.17 a share from January through September, down from $3.45 billion, or $3.16 a share, in the same period last year. Credit-related expenses, including set-asides to account for bad loans, jumped by $1.6 billion, to $2 billion.
The company earned $961 billion, or 85 cents a share, in the first quarter, beating analysts' forecasts of 79 cents a share, and $1.9 billion, or $1.86 a share, in the second quarter, exceeding forecasts of 99 cents a share.
The nine months' results reflected the deterioration of the housing market and volatility in the credit markets in the third quarter, Fannie Mae said. Its credit losses, said to have been at historic lows in the three years prior to 2007, jumped by $477 million, to $799 million. The losses mainly were driven by declines in home prices nationwide and continued economic weakness in the Midwest.
Fannie Mae's net interest income, the difference between the cost of borrowing and the amount it receives from loans, fell by $2 billion, to $3.4 billion.
"While we're pleased to have current results, they arrive in the midst of one of the most challenging mortgage and housing markets in recent history," company President and Chief Executive Daniel Mudd said in a statement.
Fannie Mae shares fell $4.56, or 9.2 percent, to $45.23 in morning trading Friday.
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Nothing to see here...just move along. /s
Fannie will be a good buy in January of 2009.
Maybe, but right now I would avoid the financials and housing stocks like and terminal social disease.
Maybe.
The big question between now and then will be whether they’ve cleaned up their books since being busted for sloppy bookkeeping — or are they hiding a mountain of trash in their portfolio?
The big moral hazard in Fannie/Freddie is that too many people think that the government backstops them, ie, they’re as good as FDIC-insured. They’re not. There is an assumption in the markets that the Congress would bail them out... but that is all it is... an assumption.
As a result, their bonds (mortgage-backed securities) in the market command a higher credit rating than what they might have if people treated them the same as say, Countrywide or WaMu.
Help! Does that mean that amount represents home owners who have gone belly up?
I don’t suspect that project will end any time soon, in fact, may well be extended.
Fannie is IMO destined to become the largest SIV in the history of the universe, by at least an order of magnitude, and if the conforming limits are raised like Chucky is talking about in Congress so that his Wall St. buddies are let off the hook, the dollar is headed for another 10% decline post haste.
The crisis of the abuses of banking is arrived. The banks have pronounced their own sentence of death. Between two and three hundred millions of dollars of their promissory notes are in the hands of the people, for solid produce and property sold, and they formally declare they will not pay them. This is an act of bankruptcy, of course, and will be so pronounced by any court before which it shall be brought. But cui bono? The laws can only uncover their insolvency, by opening to its suitors their empty vaults. Thus by the dupery of our citizens, and tame acquiescence of our legislators, the nation is plundered of two or three hundred millions of dollars, treble the amount of debt contracted in the Revolutionary war, and which, instead of redeeming our liberty, has been expended on sumptuous houses, carriages, and dinners. A fearful tax! if equalized on all; but overwhelming and convulsive by its partial fall. Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper, as we were formerly by the old Continental paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burthen all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs. Prudent men must be on their guard in this game of Robin's alive, and take care that the spark does not extinguish in their hands. I am an enemy to all banks discounting bills or notes for anything but coin. But our whole country is so fascinated by this Jack-lantern wealth, that they will not stop short of its total and fatal explosion.
~~Thomas Jefferson to Dr. Thomas Cooper, 1814
That’s true...Fannie had problems before anything happend in the real estate market.
Their problems are bigger than that.
But notice they still MADE A PROFIT. Some are actually LOSING money.
It will be a great buy in 2015 three years after 2012 the Mayan apocalypse
Um...OK.
‘kay
GDX
Considering the panicmongering being spewed here daily by the bears and goldbugs, you’d think the loses were $140bn.
$1.4bn is chump change given the hype.
Actually since Fannie hasn’t been able to produce an audited financial report in several years nobody really knows what their true situation is.
It will be interesting to see how well their portfolio holds up.
That’s about 7000 or so mortgages at 200k a piece. In a nation of 300 million people.
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