Fannie Plans $7B Stock Issue, Dividend Cut

Fannie says it plans to issue $7 billion in nonconvertible preferred stock in December and cut its dividend in the first quarter from 50 cents to 35 cents to shore up its capital base and provide more support for the mortgage market."The market needs us to be there -- and we believe this plan will help us do that," Fannie president and chief executive Daniel Mudd said. The giant mortgage company also said "worsening housing and credit markets" will "adversely" affect its financial results for the fourth quarter. "In addition, the company continues to believe that conditions in the housing and credit markets, including expected further declines in home prices, will negatively affect the company's financial condition, and results of operations in 2008," Fannie said. The government-sponsored enterprise can be found on the Web at http://www.fanniemae.com.