Fannie Mae needs another bailout

Fannie Mae, the mortgage-finance
company operating under federal conservatorship, said it will seek $8.4 billion
in aid from the U.S. Treasury Department after reporting an 11th-straight
quarterly loss.

The company lost $11.5 billion in
the first three months of this year, it said in a Securities and Exchange
Commission filing. Fannie Mae had posted $136.8 billion in losses in the
preceding 10 quarters, and the new aid request would bring its total draw from
the Treasury to $84.6 billion since April 2009.

Fannie Mae said the quarterly loss
was largely attributable to new accounting rules that required the company to
move $1.5 trillion in mortgage guarantees to its balance sheet.

The company and Freddie Mac, its
McLean, Virginia-based rival, have been under U.S. conservatorship since
September 2008, when they were seized after losses on subprime mortgages pushed
them to the brink of collapse. The so-called government- sponsored enterprises,
which own or guarantee more than $5 trillion in U.S. residential debt, financed
or backed more than 70 percent of single-family mortgage loans in 2009.

Fannie Mae continues to inject
liquidity into the home-loan market and helped modify nearly 94,000 mortgages
in the first quarter to prevent foreclosures, doubling the number completed in
the fourth quarter of 2009, Chief Executive Officer Mike Williams said in a

Foreclosures Increased

Even with the assistance, Fannie
Mae increased foreclosures to almost 62,000 homes from about 47,000 in the
prior quarter, according to the filing. The company’s foreclosure rate
increased and its inventory of homes grew from $8.5 billion to $11.4 billion
during the first quarter.