OFHEO: Fannie Took Loss in 3Q

Fannie Mae incurred a loss in the third quarter, according to the mortgage company's regulator, and it appears that the downturn in interest rates that clipped Freddie Mac's third-quarter earnings also hurt Fannie."Their ongoing businesses are showing volatility," said James Lockhart, director of the Office of Federal Housing Enterprise Oversight. "Both lost money in the third quarter." Fannie Mae declined to comment on its third-quarter financial results. Freddie Mac recently reported a $550 million loss in the third quarter, and top executives blamed it on changes in the fair value of derivatives used to hedge interest rates, plus a 50-basis-point drop in long-term rates during the quarter. Fannie's chief financial officer recently said he expected the company's earning to show a "great deal of volatility due in large part to derivative fair-value changes." Fannie Mae can be found on the Web at http://www.fanniemae.com, and OFHEO can be found at http://www.ofheo.gov.