Fannie Mae plans to take $1.5 billion in derivative losses against its 2004 earnings, according to a 10-K filing with the Securities and Exchange Commission."Over the next six months, we expect to amortize into earnings as a component of interest expense an estimated $1.5 billion, net of tax, of the $6.9 billion related to realized losses on closed cash flow hedges as of December 31, 2003," Fannie says in its 10-K. At the end of 2003, the giant mortgage company had accumulated a balance of $6.9 billion in derivative losses over several years. At yearend 2002, the balance was $5.76 billion. The derivative losses are amortized into earnings on a time schedule that is consistent with the expiration of the hedged liabilities, a company spokeswoman explained.

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