Predictions by Fannie Mae Chief

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Fannie Mae chief urges government to do more

WASHINGTON — The housing market will weaken through 2009, with a turnaround unlikely until 2010, the chief executive of mortgage finance company Fannie Mae said Tuesday.

Fannie Mae CEO Daniel Mudd said the mortgage crisis and its effect on the housing market will be a drag on the entire U.S. economy, and he urged lawmakers and lenders to pursue "the most generous means possible" to help out borrowers facing sharply higher mortgage payments in the next few years

"It is clear that there is no single magic bullet," Mudd said in prepared remarks at a conference of the U.S. Chamber of Commerce. "The most effective steps, historically, are solutions that buy time to restore normal housing supply and demand."

Shares of Fannie Mae and its government-sponsored sibling, Freddie Mac, slumped Tuesday as Countrywide Financial Corp., the nation's largest mortgage lender, released a statement denying rumors that it would soon file for bankruptcy.......

........He (Daniel Mudd) reaffirmed the prediction made recently by Fannie Mae, the largest financer and guarantor of U.S. home loans, that American home prices will fall by 10 percent to 12 percent from their 2005 peak before the housing market can rebound, likely in 2010. The Washington-based company, which lost $1.4 billion in last year's third quarter, expects to lose money this year on eight to 10 of every 1,000 mortgages held on its $2.4 trillion book — a steep increase from four to six in 2007.......