Fannie 4Q Loss at $16B, RE: IO Loans, Neg Am

Stung by continuing writedowns on risky alt-A, interest-only, and negative amortization loans, Fannie Mae posted a $16.3 billion loss in the fourth quarter, and said it would ask the U.S. Treasury for $15 billion in cash to keep its net worth above zero. In supplementary documents filed with the Securities and Exchange Commission, the government-controlled GSE revealed that a stunning 36% of loans it bought from 2005 to 2008 are in some category of delinquency. Its entire book-of-business ($2.796 trillion) carries a 5.38% 'serious delinquent' rate. Its worst loans - in terms of late payments - come from three states: Nevada (a 13% delinquency rate), Florida (12.8%) and Arizona (8.8%). In the fourth quarter of 2008 the late payments for these three were: 4.74%, 6.4%, and 3.4%, respectively. The GSE lost $72 billion for all of 2009, compared to a $59 billion loss the prior year. To date, the Treasury has pumped $75 billion into Fannie and $52 billion into Freddie Mac to keep them in the black. Government regulators - which placed the two into conservatorships in September 2008 - fear that MBS investors will not buy their securities if the GSEs are in a negative net worth position. During the most recent quarter, Washington-based Fannie suffered $11.9 billion in credit losses and a $5 billion write-down for low income tax credit investments. "Through this prolonged stress in the housing market, we are helping homeowners across the country, supporting affordable housing, and providing financing to keep the residential markets functioning," said Fannie's chief executive, Mike Williams.