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Fannie Mae Profit Falls $1.4 Billion In 3rd Quarter

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The Associated Press

Published: November 10, 2007

WASHINGTON - Fannie Mae's third-quarter loss more than doubled to $1.4 billion, the mortgage finance company said Friday, while forecasting industry troubles through 2008 because of mounting home loan delinquencies.

Shares of Fannie Mae, the largest U.S. buyer and backer of home loans, recovered from a decline of more than 9 percent early in the day to finish at $49, a decrease of 80 cents, or 1.6 percent.
Fannie Mae posted a loss equivalent to $1.56 a share in the tumultuous July-September quarter, compared with a loss of $629 million, or 79 cents per share, a year earlier.

The company, whose profit in the first nine months of the year fell by more than half to $1.45 billion, said it expects home prices to sink by 4 percent in 2008, shrinking demand for mortgages.

The nine-month results "show that we are not immune to the current market conditions," company President and Chief Executive Officer Daniel Mudd said in a conference call with analysts.

Home prices likely won't stabilize until 2009, he noted, and as a result there will continue to be "pockets of disruption" in the credit markets.

"We expect additional foreclosures this year and next," Mudd said.

As fallout from the mortgage turmoil continues to spread, negative news Friday came from Wachovia Corp., the fourth-biggest U.S. banking company, which disclosed that the value of securities it owns backed by home loans plummeted by around $1.1 billion last month. More than $77 billion in value has disappeared from the global economy this year in paper losses driven by the crisis in the U.S. mortgage industry.

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