Fannie Mae has recently reported a third quarter loss and will be asking for help of $7.8 billion from the Treasury Department. In a recent report, the government-sponsored enterprise had reported a net loss of $5.1 billion in the period between July and September. This loss is due to the defaults on loans which were made before 2009 and consequent losses that are linked to a decline in interest rates.
It has been reported that Fannie Mae is working forward in order to reduce the losses. Both Fannie Mae and Freddie Mac have survived on the aids from the Treasury Department since 2008 after the sub-prime mortgage crisis took place.
How will Fannie Mae pay off the aids?
As per the Stock Purchase Agreement with the Treasury Department, Fannie Mae and Freddie Mac will pay 10% dividend in exchange for taxpayer support. Till date, both the organizations have received about $185 billion in aid and returned about $32 billion in dividends.
The $7.8 billion aid request by Fannie Mae today includes $2.5 billion that will be repaid to Treasury in the form of dividends on the U.S. stake.