By Al Yoon
NEW YORK (Reuters) - Fannie Mae
The government-controlled company said its regulator requested $19 billion from the Treasury under a funding commitment that on Wednesday was doubled to $200 billion. The credit, in the form of senior preferred stock purchases, was established as soaring losses led the government to push the company into conservatorship in September.
As the nation's housing market reels in its worst downturn since the 1930s, credit-related expenses accounted for the majority of Fannie Mae's loss, at $20.9 billion. It also took a $5.7 billion loss on mortgage securities.
Provisions for credit losses soared 85 percent as the U.S. economy faltered, expanding delinquencies -- which have wreaked havoc on the entire financial system -- to consumers with better credit, it said.
On Friday, the U.S. government said the unemployment rate rose to 8.9 percent in April, the highest since September 1983.
Fannie Mae's guaranty business, "including loans with lower risk characteristics, has begun to experience increases in delinquency and default rates as a result of the sharp rise in unemployment, the continued decline in home prices, the prolonged downturn in the economy" and the rise in loan balances relative to property values, it said.
What's more, Fannie Mae said its role as a linchpin in President Barack Obama's program to boost refinancings and modifications of risky mortgages will likely have a "material adverse effect" on its business and net worth.
The programs, which can reduce interest rates on loans and defer payments, lend credence to speculation the U.S. is increasing its reliance on Fannie Mae and rival Freddie Mac
Fannie Mae said it will probably have to return to Treasury for more capital in the future.
"All the signs indicate that Fannie Mae coming out of conservatorship and becoming a public company again are close to zero," said Gary Gordon, a managing director at Portales Partners in New York.
The $23.2 billion loss compares with deficits of $2.2 billion in the year ago period, and $25.2 billion in the previous quarter.
Fannie Mae's results appear to counter recent data suggesting the housing market is bottoming as falling home prices and mortgage rates increase affordability. This week the government said pending sales of U.S. homes rose in March for a second straight month.
Robert Shiller, the Yale University housing economist who predicted the housing bubble, this week said a bottom would probably not be seen until 2010.
The speed of the downturn has greatly limited the company's ability to estimate loss reserves, it said.
(Additional reporting by Julie Haviv, Editing by Chizu Nomiyama )
