Fannie Mae loses $2.3B in quarter as defaults rise

August 8, 2008 7:49:30 AM PDT
Mortgage finance company Fannie Mae says it swung to a second-quarter loss that was more than triple what Wall Street expected as conditions in the housing market continued to deteriorate. The largest U.S. buyer and backer of home loans has posted a loss of 2.3 billion dollars, or $2.54 a share, compared with a profit of 1.95 billion dollars, or $1.86 a share, in the period last year.

Analysts surveyed by Thomson Financial had expected a loss of just 68 cents a share.

Fannie Mae president and chief executive officer Daniel Mudd says "credit performance has continued to deteriorate" and more losses are expected.

Fannie Mae has slashed its dividend from 35 cents a share to 5 cents a share and plans to hike fees, cut operating costs by 10 percent by the end of next year and take other money-saving steps.