Fannie Mae recorded a net worth deficit of $1.4 billion as of the end of June, the company announced Thursday. The Federal Housing Finance Agency (FHFA), acting in its capacity as Fannie Mae's conservator, has requested a $1.5 billion draw from the U.S. Treasury Department on Fannie Mae's behalf.
The net worth deficit takes into account the company's second-quarter net loss of $1.2 billion, as well as dividends paid on senior preferred stock held by the Treasury and a reduction in unrealized losses on available-for-sale securities in the second quarter.
In late June, the Treasury provided Fannie Mae with $8.4 billion to cure the company's net worth deficit as of the end of March. That move raised the Treasury's stake from $76.2 billion to $84.6 billion. This week's request from the FHFA would push the Treasury's holdings in Fannie Mae to $86.1 billion.
Fannie Mae's credit-related expenses, which are the total provision for credit losses plus foreclosed property expense, were $4.9 billion in the second quarter – down from $11.9 billion in the first quarter of 2010. The reduction in credit-related expenses reflected a
decrease in the rate of seriously delinquent loans, a decrease in average loss severities and an update to the company's loan-loss allowance model to use mark-to-market loan to-value ratios rather than loan-to-value ratios at origination in its severity calculations.
SOURCE: Fannie Mae