Swamping the nation’s largest mortgage buyer today are the Fannie Mae foreclosures. In the first quarter of 2010, Fannie Mae reported an $ 11.5 billion loss. Fannie Mae stock has been in freefall. Freddie Mac, Fannie Mae’s little brother, lost more than $ 6.7 billion. Fannie Mae asked the U.S. Treasury for an infusion of $ 8.4 billion on Monday. Fannie and Freddie, together, need about $ 20 billion to stay afloat.

Fannie and Freddie: the only game in town

Elected officials from both sides of the congressional aisle are eager to get point by threatening to stop giving money to Fannie and Freddie. The problem: Fannie Mae and Freddie Mac are the only loan company in town since 2008, when the mortgage securities froze up. No one in Congress has the guts right now to do anything that could further weaken the housing market, particularly because Fannie Mae foreclosures are steadily increasing.

Fannie and Freddie: politics as usual

Many politicians are still avoiding action on Fannie Mae and Freddie Mac, despite the fact the Senate has passed an amendment Wednesday placing stricter rules on writing loans. The Senate failed to pass a provision on Fannie Mae and Freddie Mac Tuesday night, as reported by Politico. Republicans and Democrats are having a difficult time deciding on the language dealing with loans and who should be given the responsibility to oversee regulations. Democrats want a newly created consumer protection agency to regulate the loans. On the other hand, Republicans are calling towards the big government card, claiming that the consumer protection agency would have too much power.

Fannie and Freddie dive deep

Fannie Mae and Freddie Mac behaved like any other bank during the housing bubble. The insatiable two collected $ 3.9 trillion from investors who purchased a large quantity of mortgages they assembled. Fannie Mae stock soared, for awhile. Fannie Mae and Freddie Mac are publicly traded companies, but when they got in too deep, investors lost confidence. Fannie and Freddie threatened to cave in deep, bringing the nation’s housing market down with them. In 2008, the federal government had no choice but to take over Fannie and Freddie in hopes to avert catastrophe.

Fannie Mae stock

The U.S. Treasury has already handed over a total of more than $ 145 billion into the hands of Fannie Mae and Freddie Mac. According to Medill Chicago, Fannie Mae reported an $ 11.53 billion quarterly loss, or $ 2.29 per diluted share of Fannie Mae stock, which is good news considering that number was at $ 23.2 billion and $ 4.09 a share the year before. Analysts had estimated a loss of $ 1.75 per share. Monday’s report marked the 11th consecutive quarterly loss.

On Tuesday, Fannie Mae’s shares traded at about $ 1.05. Two years ago, shares prices sat at about $ 26.30. And shares fluctuated between $ 65 and $ 80 for much of the last decade. On Tuesday, the stock closed down 0.94 percent at $ 1.05.

Fannie and Freddie’s problem crisis

Fannie and Freddie are losing money because they possess or guarantee more than 50 percent of mortgages in the United States. As reported by the New York Times, the details on the losses at Freddie Mac paint a chilling picture of the housing market. Freddie Mac foreclosures rose from 29,145 properties at the end of March 2009 to almost 54,000 units in 2010. Freddie’s nonperforming assets almost doubled, rising to $ 115 billion from $ 62 billion. When they sell, Freddie Mac foreclosures lose around 39 percent on a normal basis.

Freddie Mac delinquencies

According to the New York Times, Freddie Mac is also plagued by delinquencies. Mortgage payments more than 90 days past due in Freddie’s single-family conventional loan portfolio rose from last year’s 2.41 percent to 4.13 percent. One step up from subprime loans, delinquencies in Freddie’s Alt-A book totaled 12.84 percent. Delinquencies on mortgages of interest-only were 18.5 percent. Option-adjustable rate loan delinquencies totaled 19.8 percent.

Indefinite losses with Fannie and Freddie

To make sure that enough funds were available to mortgage lenders, Fannie Mae was created during The Great Depression, and then re-chartered by Congress in 1968 as a publicly traded company. Freddie was created for the same reason in 1970. Today, both companies are caught between a rock and a hard place. The two giants began losing billions when the housing market tanked. But the mortgage meltdown also made the nation’s housing market totally dependent on them. Fannie Mae and Freddie Mac exist to support the mortgage market by purchasing loans from banks and other lenders. They must work, at the same time, to minimize credit losses so the billion that taxpayers have thrown at them don’t dry out.

fannie mae, foreclosures, freddie mac, loan company