Exactly about Fannie Mae could face more losings

Due to the fact mortgage company discloses intends to raise $7 billion

(Fortune) — Could Fannie Mae function as next big monetary business to announce huge amounts of bucks of market losings on bonds supported by troubled mortgages?

That undoubtedly appears feasible following the government-sponsored mortgage giant announced plans Tuesday to bolster money by attempting to sell $7 billion of the latest stock and cut its dividend by 30%. In a statement Tuesday regarding the money plan, Fannie Mae stated it faced a selection of mortgage-related losings, including market losings from the securities it holds.

The great majority of Fannie Mae’s mortgages are loans to borrowers with good credit, but within the last five years the federal government sponsored enterprise became confronted with mortgages which were built to individuals with dismal credit – subprime mortgages – and also to mortgages that have been created using incomplete paperwork of borrowers’ earnings, called Alt-A mortgages in industry parlance. Continue reading