WASHINGTON, DC - Fannie Mae said Tuesday it planned to raise $6 billion in new capital through the public sale of common stock, convertible preferred stock and non-convertible preferred stock. The government sponsored mortgage services company said as part of its capital raising plan, it was also cutting its quarter dividend to 25 cents a share from 35 cents, starting with the third quarter. The reduction in its dividend is expected to make $390 million of capital available annually.
Separately, the Fannie Mae said its government regulator, the Office of Federal Housing Enterprise Oversight, will reduced the current OFHEO-directed requirement to 15% capital from 20% following the completion of the company's capital raising plan. The company said OFHEO plans to reduce the capital surplus to a 10% surplus in September 2008, if it continues to maintain excess capital well above requirements with no material adverse changes to regulatory compliance.
Fannie Mae also announced a number of new initiatives aimed at providing liquidity, stability and affordability to the housing and mortgage markets, such as new refinancing options for up-to-date but underwater borrowers and an expansion of its partnership with state Housing Finance Agencies to provide financing for first-time home buyers.
Separately, the company reported a first-quarter net loss of $2.19 billion, or $2.57 a share, vs. earnings of $961 million, or 85 cents a share, in the same period a year ago. The mean estimate of analysts is for a loss of 81 cents a share.
Net revenue for the quarter rose to $3.78 billion from last year's $2.73 billion, with net interest income growing to $1.69 billion from $1.19 billion and guaranty fee income rising to $1.75 billion from $1.1 billion. Combined loan loss reserves grew to $5.2 billion from $3.4 billion at the end of 2007. The stock closed Monday at $28.29, and was shedding 9.9% to $25.50 in premarket trading.
Source: AllHeadlineNews.com