Fannie Mae loses $23 billion in Q1, seeks $19 billion Treasury aid

The US mortgage giant Fannie Mae on Friday reported a first-quarter loss of $23.2 billion, compared with a loss of $25.2 billion, in the fourth quarter of 2008.

''The results were driven primarily by $20.9 billion in credit-related expenses, securities impairments of $5.7 billion, and fair value losses of $1.5 billion, as persistent deterioration in housing, mortgage, financial and credit markets continued to adversely affect our financial results,'' the company said.

The loss resulted in a net worth deficit of $18.9 billion as on March 31, 2009. In order to cover this amount the troubled mortgage company said that it has submitted a request for $19 billion from the Treasury department under the terms of the 'Senior Preferred Stock Purchase Agreement' (SPSPA) between Fannie Mae and the Treasury.

''Due to current trends in the housing and financial markets, we expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from the Treasury,'' the company said in its quarterly report.

On March 31, 2009, the Treasury provided Fannie Mae with $15.2 billion under the terms of SPSPA to cover its net worth deficit as on December 31, 2008.

Consequently, the aggregate liquidation preference of the senior preferred stock increased from $1 billion to $16.2 billion as on March 31, 2009.