Fannie takes another loss
Fannie Mae has reported yet another significant loss as mortgage defaults rise. I wonder how many Jumbo loans Fannie is going to be able to buy (now that the limits have been raised for conforming loans) if they need to raise additional capital just to keep their loan reserve ratio in compliance?
There goes the theory that Fannie only invests in "safe" mortgages.
Frankly, it is looking increasingly likely that the extra capital the mortgage finance industry needs is going to have to come from the government. I may not like it, but if things keep deteriorating like this I fully expect to see some sort of government initiative to either pump public funds into Fannie and Freddie, purchase troubled mortgages, or all of the above.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEOO45bhYzFY&refer=home
There goes the theory that Fannie only invests in "safe" mortgages.
Frankly, it is looking increasingly likely that the extra capital the mortgage finance industry needs is going to have to come from the government. I may not like it, but if things keep deteriorating like this I fully expect to see some sort of government initiative to either pump public funds into Fannie and Freddie, purchase troubled mortgages, or all of the above.
The slump may force the company, which sold $7 billion in preferred stock in December, to raise more money, said Paul Miller, an analyst at Friedman Billings Ramsey & Co. in Arlington, Virginia.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEOO45bhYzFY&refer=home