Fannie May Seek Feds' Help After $29B Loss

By Alan Zibel

WASHINGTON -- Fannie Mae (FNM Quote) on Monday posted a $29 billion loss in the third quarter as it took a massive tax-related charge, and said it may have to tap the government's $100 billion lifeline as early as next year.

The mortgage finance company, seized by federal regulators more than two months ago, posted a loss of $13 per share for the July-September quarter, mainly due to a $21.4 billion non-cash charge to reduce the value of tax assets. That compares to a loss of $1.4 billion, or $1.56 a share, in the year-ago period. Analysts surveyed by Thomson Reuters had expected a loss of $1.60 per share.

Fannie Mae's net worth -- the value of its assets minus the value of its liabilities -- fell to $9.4 billion at the end of September from $44.1 billion at the end of last year. If that number turns negative, Fannie Mae said it would be required to obtain funding from the Treasury Department.

The ultimate bill for taxpayers may depend on whether the government, under President-elect Barack Obama, uses Fannie Mae and its sibling company Freddie Mac (FRE Quote) as a way to alleviate the foreclosure crisis by aggressively modifying or refinancing loans.

"They're no longer being run for profit," said Fox-Pitt Kelton analyst Howard Shapiro.

Washington-based Fannie Mae posted a loss of $13 per share for the July-September quarter, mainly due to a $21.4 billion non-cash charge to reduce the value of a tax asset and $9.2 billion in expenses resulting from falling home prices and surging defaults.