Fannie Mae is in trouble again and asking taxpayers to come to the rescue. On Wednesday, the mortgage behemoth reported $2.41 billion in fourth-quarter losses and is asking the federal government to help cover its deficit to the tune of $4.57 billion, according to the Washington Post.
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The Washington-based lender reportedly lost money in the October to December period due to falling home prices. Officials at Fannie Mae also blame recent losses on the fact that some homeowners have refinanced at rock-bottom mortgage rates and are paying less interest, while others are defaulting on their mortgages.
Since the government helped Fannie Mae and sibling company Freddie Mac cover their losses on bad mortgage loans in September 2008, the Federal Housing Finance Agency has been in charge of their financial decisions. The bailout, which cost taxpayers more than $150 billion, was the costliest rescue of the 2008 financial crisis. However, the government says it could cost more than an estimated $259 billion after dividend payments to prop up the companies through 2014.
So far, the Treasury Department has doled out more than $116 billion to Fannie Mae, making it the most expensive bailout of an individual company in history. Freddie asked for an extra $6 billion in aid in November after a third-quarter loss of $6 billion.
In the past few years, Fannie Mae and Freddie Mac, along with other federal agencies, have backed almost 90 percent of new mortgages. A year ago, the Obama administration announced a plan to gradually dissolve the two mortgage companies, a move that would give the the government a smaller role in the mortgage system, and likely make home loans more costly.
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