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Friday, August 08, 2008

Fannie Mae: Books $5.35 billion in credit-costs, to Halt Alt-A

by Calculated Risk on 8/08/2008 09:42:00 AM

From the WSJ: Fannie Posts Deep Loss, Slashes Dividend Payment

Fannie Mae swung to a second-quarter loss as the largest buyer of home loans booked $5.35 billion in credit-costs from boosting loss provisions and charge-offs. ... eliminating higher-risk loans -- namely newly originated Alt-A acquisitions ... As of June 30, Alt-A mortgage loans represented 11% of Fannie's total mortgage book of business and 50% of its second-quarter credit losses.
And from Bloomberg: Fannie Mae, Battling Losses, to Stop Accepting Alt-A Mortgages
Fannie Mae, the largest U.S. mortgage- finance company, will stop buying or guaranteeing Alt-A home loans, such as those that require little or no documentation of borrower incomes or assets, by yearend.
...
``Over 60 percent of our losses have come from a small number of products, but especially Alt-A loans,'' ... the Washington-based company said in a statement.