Mortgage Mess Hammers Fannie Mae
Fannie Mae's (FNM) third-quarter loss more than doubled as the mortgage investor took big hits from the credit crunch and housing market downfall.
Shares were sliding $3.50, or 7%, to $46.30.
The Washington, D.C.-based company reported a loss of $1.4 billion, or $1.56 a share, for the quarter ended Sept. 30. That compared with a year-earlier loss of $629 million, or 79 cents a share.
Revenue slipped to $2.51 billion from $2.85 billion the prior year.The results reflect how Fannie, the nation's largest buyer and backer of mortgage loans, was hurt by increasing foreclosures and defaults on subprime loans. The company's provision for credit losses soared in the quarter to $1.2 billion from $197 million a year earlier. Fannie said it expects the U.S. housing downturn will lead to further declines in mortgage originations through next year, and it anticipates continued volatility in its financial results. The company's report brings it up to date in its financial reporting for the first time since it was rocked by an accounting scandal three years ago. For the first nine months of the year, Fannie's profit fell to $1.51 billion, or $1.17 a share, from $3.46 billion, or $3.16 a share, a year earlier.
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