More aid for Fannie Mae as the mortgage giant suffers losses of $14.8 billion

On Thursday US largest provider of home mortgage funding Fannie Mae reported a net loss of $14.8 billion saying it would force the company to apply for additional funding by the US Treasury. Reporting its eighth consecutive quarterly loss Fannie Mae pointed to a "significant uncertainty" of its long-term financial health.

The company said its regulator requested $10.7 billion from the Treasury to erase a deficit in its net worth, bringing total draws under a senior preferred stock purchase program to $45.9 billion. The loss of $14.8 billion compares with a $2.3 billion loss in the same quarter a year ago and a $23.2 billion loss in the first quarter.

The quarter defaults led to credit-related expenses of $18.8 billion, compared with $20.9 billion in the first quarter. Falling home prices and rising unemployment together stimulated defaults increase on the less risky loans it guarantees, said Fannie Mae. The company noted that deteriorating conditions are "a result of the stress on a broader segment of borrowers due to the rise in unemployment and the decline in home prices.”

Thereby, Fannie Mae will likely seek additional funding from the Treasury via senior preferred stock purchases.