SOURCE: The Bedford Report

The Bedford Report

November 14, 2011 08:16 ET

Fannie Mae and Freddie Mac to Remain in the Doldrums for Much Longer

The Bedford Report Provides Equity Research on Fannie Mae & Freddie Mac

NEW YORK, NY--(Marketwire - Nov 14, 2011) - It was yet another disappointing quarter for Fannie Mae and Freddie Mac. The two mortgage giants continue to pile up losses as low mortgage rates reduced profits and declining home prices caused more defaults on loans it had guaranteed. When property values drop, homeowners are more likely to default, either because they are unable to afford the payments or because they owe more than the property is worth. Because of the guarantees, Fannie and Freddie must pay for the losses. The Bedford Report examines the outlook for companies in the Mortgage Investment Industry and provides research reports on Fannie Mae (OTCBB: FNMA) and Freddie Mac (OTCBB: FMCC). Access to the full company reports can be found at:

Last week Fannie Mae asked the federal government for the $7.8 billion bailout to fund its $7.6 billion third quarter loss. Taxpayers have already given $169 billion to rescue Fannie and Freddie -- the most expensive bailout of the 2008 financial crisis -- and the government estimate aid could reach to $220 billion by 2014, according to the AP.

Despite the challenges, Fannie Mae President and CEO Michael Williams argues that the company is "making progress." Fannie's rate of homeowners who are late on their monthly mortgage payments by 90 days or more has decreased each quarter since the beginning of 2010.

The Bedford Report releases investment research on the Mortgage Investment Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

Fannie's request for more assistance comes a mere two weeks after federal officials claimed Fannie and are Freddie are unlikely to need any more taxpayer money and will soon start paying back their loans. Fannie and Freddie must pay a hefty 10 percent dividend on money they borrow from taxpayers. This has led to a somewhat counterintuitive situation in which Fannie and Freddie must borrow money from taxpayers to pay taxpayers back.

The Obama administration and Republicans have said flatly that they want to get rid of the companies. It should be "clear to everyone at this point" that the firms "will not be able to earn their way back to a condition that allows them to emerge" from government ownership, said Edward DeMarco, the acting director of the Federal Housing Finance Agency, in a speech this fall.

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