More pain at Fannie - $2.3 billion loss
Mortgage finance giant suffers much larger-than-expected loss due to reserves for credit losses and slashes its dividend to preserve capital.
NEW YORK (CNNMoney.com) -- Mortgage finance giant Fannie Mae reported a much larger-than-expected loss in the second quarter and slashed its dividend Friday, more signs that the problems in housing and financial markets are not over.
The firm reported a net loss of $2.3 billion, or $2.54 a share. Analysts surveyed by Thomson Reuters forecast a loss of 68 cents a share, compared to earnings of $1.86 a share a year earlier. But large increase in reserves for bad debt and a writedown in the value of its holdings hurt the results.
The company warned of billions more in credit losses this year than it had previously forecast, and said the rate of credit losses is likely to get even worse next year.
Fannie Mae also gave a gloomier forecast on the battered housing market, saying that the range of price declines is likely to be at the upper end of its previous forecast of a 7% to 9% drop in 2008.
"The housing market has returned to earth fast and hard," Fannie Chief Executive Daniel Mudd said in a conference call. He said uncertainty about the market made it impossible to say "what inning we're in" or when prices would reach bottom.
"There is progress but we have a long way to go," Mudd added.
Fannie losses much larger than expected, slashes dividend - Aug. 8, 2008
