Fannie Mae, Freddie Mac Losses May Last Into 2009 as Delinquencies Spread

[Purveyor]

Source: Bloomberg

Aug. 5 (Bloomberg) -- Fannie Mae and Freddie Mac, the biggest U.S. mortgage-finance companies, may report net losses through the first quarter of 2009 as home-loan delinquencies rise to the highest on record, analysts' estimates show.

Freddie, based in McLean, Virginia, may say tomorrow when it releases second-quarter results that it had $1.9 billion in credit-related costs, while Washington-based Fannie on Aug. 8 will report $2.4 billion, according to Credit Suisse analyst Moshe Orenbuch in New York. The companies' regulator said in a July 22 report that Fannie and Freddie may need to write down the value of $217 billion in subprime and other risky securities.

``We see them continuing to lose money for the next several quarters,'' said Orenbuch, the top-ranked analyst covering the companies, according to Institutional Investor magazine. He rates Fannie and Freddie ``underperform.'' ``Their credit losses are still going to be stubbornly high and that's only partially offset by the better revenues'' for guaranteeing loans from default, he said in an interview.

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Earnings Forecasts

Freddie will continue to lose money through the second quarter of 2009, while Fannie's losses will extend through the first three months of next year, according to the analysts. Freddie spokesman Michael Cosgrove declined to comment before the earnings report, as did Fannie spokesman Jason Lobo.

The New York Times reported today that Syron ignored internal warnings that Freddie was taking on excessive risk. Syron was told as early as 2004 by David Andrukonis, who was then chief risk officer, that the company was buying dangerous loans, the newspaper said, citing an interview with Andrukonis.

Read more: http://www.bloomberg.com/apps/news?pid=20601103&sid=aUXmsEmh4ADQ&refer=us

[whistle]

1. Taxpayers bailing out the speculators while millions of homeowners

...continue to be forced into foreclosures. This is a disastrous situation for the U.S. economy and will not save it. It is only helping a handful of Wall Street speculators and big commercial banks unload bad paper