Fannie Mae needs $8.4 billion more from Treasury to cure deficit

By Angela McDaniels

Tacoma, Wash., May 10 - Fannie Mae is seeking an additional $8.4 billion under its senior preferred stock purchase agreement with the Department of the Treasury, according to the agency's first-quarter earnings release.

The agency said the acting director of the Federal Housing Finance Agency asked Treasury to provide the funds by June 30 in order to eliminate Fannie Mae's net worth deficit, which was $8.4 billion as of March 31.

This will increase the total amount of preferreds issued by Fannie Mae to Treasury to $84.6 billion from $76.2 billion.

Treasury provided $15.3 billion on March 31 to cure Fannie Mae's net worth deficit as of Dec. 31.

Fannie Mae said that due to current trends in the housing and financial markets, it continues to expect to have a net worth deficit in future periods and therefore will be required to obtain additional funding from Treasury under the preferred stock purchase agreement.

The agency had a net loss of $11.5 billion in the first quarter and a net loss of $15.2 billion in the fourth quarter of 2009. Net revenue was $3.0 billion in the first quarter, down 48% from $5.8 billion in the fourth quarter of 2009.

Fannie Mae said its first-quarter results were driven primarily by credit-related expenses that remain elevated due to weaknesses in the economy and the housing market.

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