Fannie Mae loses $2.3B in quarter as defaults rise

WASHINGTON (AP) - August 8, 2008 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.