Fannie Mae Posts Stunning Losses

Fannie Mae lost more in the third quarter of this year than it gained from soaring house prices between all of 2002 and 2006, the New York Times reports. The massive $29 billion loss, mainly from asset writedowns, means the company may need more than the $100 billion pledged from the government to stay afloat. Experts believe the results could also signal a prolonged fall in house prices.

Just how low can prices go? Fannie Mae estimates that the market has already dropped almost 10% since its peak in 2006, and will fall a total of 19% before hitting bottom. Analysts fear the effect this will have on the mortgage lender. “If they are talking about taking money now, it means they are eventually going to take more than we probably expected over the long run," noted one observer.
(More Fannie Mae stories.)