Global News

Fannie Mae reports $6.5B loss for fourth-quarter 2017

Fannie Mae reports $6.5B loss for fourth-quarter 2017

The mortgage-finance company, which reported fourth-quarter and full-year financial results on Wednesday, said it will need to draw $3.7 billion from the U.S. Treasury in March to keep its net worth from going negative. In December, the Treasury Department and the Federal Housing Finance Agency, which controls the companies, agreed to allow Fannie and Freddie to hold capital buffers of $3 billion apiece. Freddie Mac paid $11 billion to the exchequer in 2017. For full-year 2017, Fannie Mae posted a net income of $2.5 billion, down from $12.3 billion in 2016. The mortgage giant added that its annual pre-tax income for 2017 was $18.4 billion, compared with $18.3 billion in 2016 which it said reflects "the strength of the company's underlying business fundamentals". "As it turned out, [that money] was not enough to cover the losses it suffered in the fourth quarter thanks to the Republican tax plan", HousingWire said. "That's why Congress can and should enact comprehensive housing finance reform this year to create a sustainable housing system".

If Fannie Mae receives the cash infusion, it will mark the first time since 2012 that the government has been forced to pour money into the mortgage association. The company said it expects the FHFA to request $312 million from the Treasury. That lower rate, estimated at 20 percent, is expected to benefit Fannie Mae in 2018, officials said in the Wednesday report. "Other factors that may result in volatility in the company's quarterly financial results include developments that affect its loss reserves, such as changes in interest rates, home prices or accounting standards, or events such as natural disasters".




Watt said that although the companies were on much better footing, financially, since the meltdown of 2008, the incremental draw-down of their taxpayer buffer meant there was greater risk of the need for a taxpayer bailout.


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