Fannie Mae reported a $6.5 billion loss for the first quarter, after posting an operating profit of $73 million in the prior period.
The latest results suggest that while its sister company Freddie Mac appears to be earning money again, Fannie -- the larger of the two GSEs -- still has a long way to go before working through all its problem loans.
Not only did Fannie report a large loss, it is asking the U.S. Treasury for $8.5 billion in taxpayer money to maintain a positive net worth. It also must pay $2.2 billion in interest payments on previous Treasury draws.
Fannie president and chief executive Michael Williams blamed falling home prices and loan losses for the poor results, noting that the GSE’s credit-related expenses will remain “elevated” throughout 2011.
The secondary market giant incurred $11 billion in credit-related expenses in 1Q, up from $4.3 billion in the fourth quarter.
Fannie and Freddie Mac have been operating in conservatorship since September 2008.
In the fourth quarter, Fannie reported an unexpected $73 million operating profit thanks to a $1.3 billion check from Bank of America to settle certain loan repurchase requests.
But Freddie produced a true surprise for 1Q, earning $676 million, and posting its first true net profit in almost two years – even after paying Treasury $1.6 billion in dividends on the preferred stock it owns.
