Fannie Mae Posts Large Third-Quarter Losses

Today Fannie Mae, the largest buyer of mortgages on the secondary market, reported losses of 1.39 billion dollars as the credit crisis delinquencies increased.

This loss was caused by a 2.25 billion dollar decline in the value of contracts and 1.2 billion dollars in credit losses. Fannie Mae currently holds or guarantees 2.7 trillion dollars in mortgage assets, according to the US Securities and Exchange Commission filing that was issued today.

Daniel Mudd, Chief Executive Officer of Fannie Mae, stated today that the housing market will worsen. The average price of homes falling 2 percent this year and estimated at 4 percent in 2008 more losses are expected to come. Fannie Mae also gave the results for the first and escond quarters, bringing it up to date on its earnings reports.

Mudd said today that Fannie Mae “is not immune to the challenges facing the mortgage markets.” Fannie Mae has already begun tightening their underwriting and pricing to help prevent losses from rising. Mudd also said that the “market conditions are also creating opportunities for us. When the cycle turns we are going to be in a stronger and stronger position.”

To read more about Fannie Mae third-quarter loss widens on housing slump head on over to Bloomberg.