WASHINGTON (AP) - Fannie Mae has reported losses of 2.2 billion
dollars in the first quarter. The nation's largest buyer of home
loans says it will cut its dividend and raise 6 billion dollars in
new capital, amid expectations the housing slump continues into
Home prices fell faster in the first quarter than Fannie Mae had
expected. It will open a 4-billion-dollar share offering
immediately, with the remainder being offered in the "very near
Fannie Mae's federal regulator, the Office of Federal Housing
Enterprise Oversight, says that following the stock sale, it will
cut the capital surplus cushion the company has to maintain by 5
percentage points to 15 percent. Another five-point cut will come
in September, provided there is "no material adverse change" in
the company's regulatory compliance.
The agency's director, James B. Lockhart, said capital
requirements were eased because Fannie Mae has improved internal
financial controls following a multibillion-dollar accounting
scandal in 2004.
The government has come to rely increasingly on Fannie Mae and
Freddie Mac as other lenders have shied away from the risk-heavy
market for mortgage securities.
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