Fannie Mae seeks $7.8 billion in additional bailout
Fannie Mae’s headquarters in the nation’s capital are seen November 9, 2011 in Washington, DC. Citing the rise in defaults on loans it has guranteed, the government-controlled mortgage giant is asking the federal government for $7.8 billion in aid to covers its losses in the in the third quarter of FY 2011. Fannie has received $112.6 billion so far from the Treasury Department – the most expensive bailout of a single company.
Fannie Mae is asking taxpayers for an additional $7.8 billion in funds in a move that will test the frustrated public already angry over the Wall Street bailouts, the Associated Press reported.
The mortgage giant is asking the federal government for the $7.8 billion bailout to fund its $7.6 billion third quarter loss. The government took over the Fannie Mae and Freddie Mac enterprise in September 2008 during the height of the sub-prime mortgage crisis.
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Fannie’s losses are increasing because some homeowners are paying less interest after refinancing at historically low mortgage rates while otheres are defaulting altogether, Fannie’s president and CEO Michael Williams said.
Taxpayers have already given $169 billion to rescue the two companies – the most expensive bailout of the 2008 financial crisis – and the government estimate aid could reach to $220 billion by 2014, according to the AP.
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Fannie and Freddie own or guarantee about half of all US mortgages, in addition to backing 90 percent of new mortgages along with other federal agencies this past year.
Washington-based Fannie and McLean, Va.-based Freddie own or guarantee about half of all mortgages in the U.S., or nearly 31 million home loans. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past year.