Fannie Mae wants more of your money but Freddie Mac made a profit? The Freddie Mac rescue will cost the taxpayer about $259 billion. They made a profit of 600 million dollars last quarter but no talk of them ever paying us back. If they keep making 600 million a year, it will only take about 43 years to pay us back. On another sour anti-capitalist note, shareholders have lost their case to sue former directors and officers of the government-owned finance company. The decision: “A federal appeals court in Richmond, Virginia, today upheld a ruling by U.S. District Judge Leonie Brinkema, who found that the 2008 law creating the FHFA as Freddie Mac’s conservator gave the agency the authority to substitute itself as the plaintiff.”
“Fannie Mae asked the government Friday for an additional $8.5 billion in aid after declining home prices caused more defaults on loans guaranteed by the mortgage giant.
The company said it lost $8.7 billion in the first three months of the year. Those losses led Fannie to request more than three times the federal aid it sought in the previous quarter. The total cost of rescuing the government-controlled mortgage buyer is nearing $100 billion — the most expensive bailout of a single company.
Combined with the bailout of sibling company Freddie Mac, the government expects their rescue to cost taxpayers about $259 billion. That money will cover the mortgage giants’ losses on soured loans made in the midst of the housing bubble.
Home prices declined on average 1.8 percent across the country during the January-March quarter, Fannie Mae said. That led to more foreclosures and to homeowners abandoning houses that were worth less than they owed on their mortgages.
“We expect our credit-related losses to remain elevated in 2011 as we continue to be negatively impacted by the prolonged decline in home prices,” President and CEO Michael Williams said in a statement.
The losses incurred in the first three months of the year are related to loans that were extended before 2009, Fannie Mae said. The company expects to make money on home loans that it acquired since January 2010.
The companies nearly toppled because of losses on risky mortgages that they purchased between 2005 and 2008. They tightened their lending standards after those loans started to go bad.
Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default and sell them to investors around the world.
When property values drop, homeowners default — either because they are unable to afford the payments or because they owe more than the property is worth. Because of the guarantees, Fannie and Freddie must pay for the losse…” Read here: The Beast
Investors lose their rights: Shareholders lose rights