Fannie Mae Cuts Dividends by 30% and Frees Up Assets

After today’s closing bell Fannie Mae announced that they will sell 7 billion dollars in preferred stock and cut it’s dividend 30 percent to gain capital throughout 2008.

It’s no secret that Fannie Mae and Freddie Mac have been having problems with capital. The move made today to free up assets will allow the government sponsored home mortgage lending company to prepare itself for credit losses and maintain its ability to purchase and guarantee mortgages. In response to todays decision Daniel Mudd, Fannie Mae’s chief executive officer states “Fannie Mae has a responsibility to serve the mortgage market in good times and in times like these. The steps we are taking today are designed to enable us to meet that responsibility.”

David Benson, Fannie Mae’s Treasurer, said that Fannie Mae intends to move quickly as market conditions worsen and financial institutions are seeking access to capital. This added capital will allow Fannie Mae to continue it’s roll as a major source of funding for banks and other mortgage lenders by buying up mortgages they make and then bundling them as securities for sale to investors.

To read more about Fannie Mae cuts dividend head on over to CNBC.