Fannie Mae Seeks $1.53 Bil. Bailout After Big Q4 Loss

Fannie Mae is asking for a federal cash infusion of $15.3 billion after posting another big loss in the fourth quarter of last year.

The mortgage finance company, seized by federal regulators in September 2008, lost $16.3 billion, or $2.87 a share in the October-December period. That takes into account $1.2 billion in dividends paid to the Treasury Department. It compares with a loss of $25.2 billion or $4.47 a share, in the year-ago period.

During the most recent quarter, Washington-based Fannie suffered $11.9 billion in credit losses and a $5 billion write-down for low income tax credit investments.

The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request for aid will bring Fannie Mae’s total to more than $75 billion. The total bill for the duo has topped $127 billion.

Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.

Earlier in the week, Freddie reported a loss of $7.8 billion for the fourth quarter, but didn’t request any more money.

Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That’s about half of all mortgages.

The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences.

2/26/2010 5:15 PM ALAN ZIBEL, AP Real Estate Writer WASHINGTON