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Fannie Mae asks taxpayers for another $4.6 billion

The continuing bailout

Mortgage giant, Fannie Mae reported today a loss of $2.4 billion in the fourth quarter of 2011, pointing to home values’ continuing slide and says they will be asking for another $4.6 billion to make up for the deficit. The Federal Housing Finance Agency (FHFA) seized Fannie Mae in 2008, and as Fannie’s conservator, they plan to request the funds from the U.S. Treasury Department which would bring the total taxpayer funds to Fannie and Freddie Mac to nearly $190 billion.

Leading up to the crash, not only did loans fail, the finances were being “cooked” to keep investors on board, leading to numerous investigations into former Fannie leadership, which was revealed last week the taxpayers are footing the legal bills for.

With $150 billion already given to Fannie and Freddie by taxpayers and this additional request putting the total closer to $190 billion, federal agencies project the amount could be closer to $260 billion after subtracting dividend payments through 2014.

In a statement, Fannie Mae points to the major losses last quarter are the fault of homeowners paying less interest, having been granted permanent modifications at much lower mortgage rates, meanwhile defaults remain high.

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The future of Fannie

Last year, the Obama administration put forth a plan to abolish Fannie and Freddie while various politicians on both sides of the aisle have also put forth plans to wind down the two agencies. Recently, the FHFA announced plans to privatize the two mortgage giants, with Edward DeMarco, the acting FHFA Director noting, “Conservatorship is not meant to go on forever. Ultimately, we are going to need congressional action to conclude the conservatorship.”

The FHFA notes that “Fannie Mae and Freddie Mac were chartered by Congress and by law, only Congress can abolish or modify those charters and set forth a vision for a new secondary market structure.”

The agency put forth a detailed plan for accomplishing their goals of the agencies being privatized and to end what some consider a continued bailout, as Congress offered Fannie and Freddie a blank checkbook, which they continue to use.

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Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.

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