Fannie Mae reported second-quarter earnings this morning:
Stock analysts expected: a loss of 68 cents a share;
Stock analysts got: a loss of $2.54 a share.
Also, "to preserve cash, Fannie Mae slashed its dividend to 5 cents a share from 35 cents a share".
Friday, August 8, 2008
Fannie Reports
Posted by Harriet at 10:50 AM
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4 comments:
http://www.wtopnews.com/?nid=111&sid=1353030
Fannie Mae is raising fees, which will be passed onto borrowers as higher interest rates, and abandoning "Alt-A" borrowers because those loans are defaulting at an alarming rate.
"credit-related expenses more than offset higher revenue and fair value gains"
fair value gains? found them, see pp 11-12:
http://tinyurl.com/6a7o5z
interest rate/volatility derivatives swung from a $3 billion loss last quarter to a $2.3 billion gain.
can someone splain this?
Fannie Mae has a hedging department. Everytime they make a commitment to purchase mortgages, they hedge that purchase.
Sounds like they made some good investments in either index funds or bonds - probably investments outside of the US.
Meanwhile, credit expenses offset these gains. Not sure what credit expenses are, unless they roll REO and pending foreclosures into that.
BTW, I find it interesting that Fannie Mae does not pay any taxes to DC, even though it is headquartered there. Somehow it got an exclusion to paying them, just as the Federal government does.
Fannie Mae has a hedging department. Everytime they make a commitment to purchase mortgages, they hedge that purchase.
Sounds like they made some good investments in either index funds or bonds - probably investments outside of the US.
Meanwhile, credit expenses offset these gains. Not sure what credit expenses are, unless they roll REO and pending foreclosures into that.
BTW, I find it interesting that Fannie Mae does not pay any taxes to DC, even though it is headquartered there. Somehow it got an exclusion to paying them, just as the Federal government does.
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