Fannie Mae reports $6.5B loss for fourth-quarter 2017

Fannie Mae reports $6.5B loss for fourth-quarter 2017

Fannie Mae will need taxpayer money again after reporting a fourth quarter net loss of $6.5 billion, according to multiple reports.

A woman toting an umbrella passes Fannie Mae headquarters in Washington February 21, 2014.

A $9.9 billion charge stemmed from re-calculations of the company's deferred tax assets following the Tax Cuts and Jobs Act, which President Donald Trump signed into law on December 22.

But in late December, the FHFA, citing the risk of a capital draw, took administrative action and restored the GSEs' capital buffers to the original level of $3 billion each, as of January 1. "We, therefore, contemplate that going forward enterprise dividends will be declared and paid beyond the $3 billion capital reserve in the absence of exigent circumstances".

Additionally, Fannie Mae provided more than $67 billion in multifamily and other rental financing in 2017, the company said.

Fannie Mae reported a fourth quarter 2017 net loss of $6.5 billion, compared with net income of $3 billion in the third quarter.

Due to the tax charge, Fannie Mae reported 2017 net income of $2.46 billion for 2017, down from $12.31 billion in 2016. The mortgage giant added that its annual pre-tax income for 2017 was $18.4 billion, compared with $18.3 billion in 2016 which it said reflects "the strength of the company's underlying business fundamentals".

In a statement, Timothy J. Mayopoulos, president and CEO of Fannie Mae, says the company is financially stable and characterized the fourth quarter loss as a one-time accounting event from which it will quickly recover. "That's why Congress can and should enact comprehensive housing finance reform this year to create a sustainable housing system". "We are doing this by delivering innovative solutions for our customers and demonstrating leadership on our country's most persistent housing challenges". The company said the increase was a result of the recent hurricanes.

In the meantime, Fannie Mae and Freddie Mac returned to profitability. With the lower tax rate, deferred tax assets are now worth less, resulting in a wave of accounting losses in corporate America since the law went into effect.

Fannie Mae, which has been under the purview of the federal government since the 2008 financial crisis, has been signaling that it would need the cash infusion for months.