Fannie Mae Posts Results for First Quarter

Yesterday, Fannie Mae reported net losses of $2.19 billion for the first quarter of 2008.  This is the company's third consecutive quarterly loss.

The quarterly loss for the Washington D.C.-based company, considered a government-sponsored enterprise (GSE), was only the second timely filing by Fannie Mae since it overhauled its accounting in the wake of the massive scandal late last year.   Statistically their recent quarterly numbers are; Q3 2007-$1.4 Billion Loss, Q4 2007-$3.6 Billion Loss, Q1 2008-$2.19 Billion Loss.   This stands in very sharp contrast to a net profit of $961 million, one year earlier.

According to its SEC filing, after payment of preferred dividends, Fannie Mae posted a net loss of $2.51 billion for the first quarter   Fannie Mae said it expects "severe weakness" in the housing market to continue with a rising tide of mortgage defaults and foreclosures in 2008.

Also of note, the mortgage giant has told lenders it will no longer buy most loans made to borrowers who have credit scores below 580, nor will it buy loans that have been more than 60 days past due within the last year.   Also of note, is the fact that FNMA is increasing its 4 year rule to a 5 year rule for past foreclosures,  without evidence that extenuating circumstances led to a foreclosure, it will also no longer buy mortgages made to borrowers who have lost a home to foreclosure within the last five years.   The new rules go into effect June 1 of this year.   "The dramatic shifts in market dynamics over the past several months have prompted us to continually review the full spectrum of our risk appetite, eligibility requirements, automated underwriting risk assessment, and pricing," Fannie Mae said in the revised guidelines.