Fannie Mae lost $1.4 billion in the third quarter as the company returned to timely financial reporting by posting its official results for the first nine months of the year.The third-quarter loss per share was $1.56. A $2.2 billion decline in the fair value of derivatives was a big drag on Fannie Mae's third-quarter results. On a year-to-date basis, credit expenses rose sharply by $1.6 billion to $2.0 billion, Fannie said. Included in that credit-related expense is a charge of $805 million on delinquent loans purchased from mortgage-backed security trusts, reflecting the difference between par value and the market value of the loans purchased. Credit losses were driven by home price declines and economic weakness in the Midwest, Fannie Mae said. "This is a tough year for our industry, and Fannie Mae is not immune to the challenges facing the mortgage markets," chief executive officer Daniel Mudd said. On the positive side, he said Fannie Mae's guaranty revenue is rising, and its market share has increased to 41% of mortgages produced in the third quarter. Fannie said net income totaled $1.5 billion in the first nine months of the year, down from $3.5 billion in the first nine months of 2006. Fannie Mae's share price fell by 3% in morning trading Nov. 9 after the results were released. Fannie can be found online at http://www.fanniemae.com.

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