Government-sponsored mortgage giant
( FNM) posted a big first-quarter loss Tuesday and said it would raise $6 billion through a stock offering to shore up its balance sheet.
Fannie lost $2.2 billion, or $2.57 a diluted share, in the quarter, driven by $4.4 billion in mark-to-market fair value losses to derivative securities and widening credit spreads. The company also increased its provision for credit losses to $3.2 billion, due to increased charge-offs.
Analysts polled by Thomson Reuters had expected a loss of 81 cents a share.
Federal regulators have directed Fannie to raise capital to address its depleted balance sheet as the housing slump continues and credit crisis lingers. Fannie said it would raise its $6 billion through offering of common, noncumulative, mandatory convertible preferred and nonconvertible preferred stock.
The Office of Federal Housing and Enterprise Oversight, Fannie's regulator, responded by saying it would lift a two-year-old consent order it placed on the company after an accounting scandal and lowering the company's capital reserve requirement to 15% from 20% after the money is raised.
Fannie also said it would cut its dividend by 10 cents to 25 cents a share beginning in the third quarter. The move will save $390 million annually, Fannie said.
Fannie shares were shedding 7.2% to $26.25 in recent premarket trading.
Mortgage lenders have been hit hard in the credit crisis beginning last summer, a situation that has not improved of late.
Bank of America
, in a
Securities and Exchange Commission
filing last week, said it hadn't yet decided whether it will take on certain mortgage debt from
( CFC) when the bank completes its acquisition in the third quarter.
Fellow government-sponsored mortgage lender
( FRE) reports results May 14.