Fannie Mae Reports Quarterly and Yearly Losses

By Esther Cho, DSNews 

Fannie Mae reported a net loss of $2.4 billion in the fourth quarter of 2011 on Wednesday, compared to a loss of $5.1 billion for the previous quarter. The stated net loss was largely due to a decline in home prices and $5.5 billion in credit-related expenses, which pertains to costs related to loan losses, guaranty losses, and forecloses.

Fannie Mae also reported a 2011 yearly net loss at $16.9 billion, compared to $14 billion in 2010. The increase for the year was mainly attributed to a $6.1 billion increase in net fair value losses in 2011, which resulted from losses in risk management derivatives caused by a significant decline in interest rates in 2011, according to the company’s latest earnings report.
“Fannie Mae remains focused on reducing losses on the legacy book, and we estimate that we have reserved for the substantial majority of the remaining losses on these loans,” said Susan McFarland, executive VP and CFO of Fannie Mae in a report. “We are seeing positive outcomes from our actions, such as our investments to build the industry’s most effective credit operation, which completed more than one million workout solutions since 2009 to help homeowners retain their homes or avoid foreclosure.”
Due to the company’s net worth deficit, Fannie Mae will have the FHFA request $ 4.571 billion from the Treasury.
The company is seeking to continue with collecting funds from Bank of America for outstanding repurchase requests for loans that did not meet underwriting requirements, according to the report. As of December 31, 2011, the report stated Bank of America accounts for about 52 percent of the outstanding repurchase requests. If the full amount is not collected from the bank, the report stated that “Fannie Mae may be required to seek additional funds from Treasury under its senior preferred stock purchase agreement.”
Additional Fannie Mae Figures
Loan modifications (HAMP and Fannie Mae’s own modifications)
- 51,936 (Q4); 60,025 (Q3)
- 213,340 completed modifications in 2011, compared to 403,506 in 2010
- The decrease is due primarily to the decline in the number of seriously delinquent loans.
Repayment plans/forbearances
- 8,517 (Q4); 8,202 (Q3)
- 35,318 for 2011, compared to 31,579 in 2010
Short sales and deeds-in-lieu of foreclosure
- 22,231 (Q4); 19,306 (Q3)
- 79,833 short sales and deeds-in-lieu of foreclosure for 2011, compared to 75,391 in 2010
Refinancings (includes Refi Plus and HARP loans)
- Acquired 732,000 loans during 2011 and reduced monthly mortgage payments by an average of $166
REO properties acquired through foreclosure
- 47,256 (Q4); 45,194 (Q3)
REO properties disposed
- 51,344 (Q4); 58,297 (Q3)
Inventory of REO properties
- 118,528 as of December 31, 2011
- 122,616 as of September 30, 2011
- 162,489 as of December 31, 2010
- The pace at which Fannie Mae acquires REO properties has slowed down due to the lengthened time it takes to foreclose on properties in many states
Carrying value of REOs
- $9.7 billion as of December 31, 2011
- $11 billion as of September 30, 2011
- $15 billion as of December 31, 2010