11 Nov 2008

Fannie Mae loss widens to $US29 billion

6:19 am on 11 November 2008

US mortgage finance firm Fannie Mae has reported a significant increase in third-quarter losses in the wake of the slowing housing sector.

Losses hit $US28.99 billion in the three months to 30 September from a loss of $US1.4 billion a year earlier, largely due to a tax-related charge of $US21.4 billion.

Fannie Mae and Freddie Mac were bailed out by the United States government in a record US corporate rescue deal in September.

Both agencies buy mortgages from approved lenders then sell them to investors.

Neither Freddie Mac nor Mannie Mae lend directly to borrowers.

Fannie Mae said it had set a further $US9.2 billion aside to cover credit losses, as the number of defaults rise.

Together Fannie Mae and Freddie Mac own or guarantee almost half of all US home loans.

Under a rescue plan passed by Congress in July, the federal government gained the right to provide unlimited liquidity to them and to buy their shares, to prevent them from collapsing.