Fannie Report Just Released…(FAR WORSE THAN EXPECTED)
Warning: If you are an agent who already has one foot out the door…well, this article will result in you completely leaving the business. Now, if you are looking for the opportunity in this market I have 2 words for you: ShortSales and REOs. Learn how to do both.
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NEW YORK (CNNMoney.com) — Mortgage financer Fannie Mae warned Tuesday that the tumbling home values and loan defaults that have crippled the U.S. economy are likely to worsen, after posting a far larger-than-expected first-quarter loss.
The firm said it now forecasts that home prices will sink 7% to 9% this year, 2 percentage points worse than its previous decline range forecast, a drop that could leave prices 19% off of peak levels.
Fannie also increased its reserves to cover bad loans it has backed by nearly $2 billion, and said it expects a worse outlook for credit losses in 2009 than it is seeing this year.
Fannie is struggling with rising loan losses caused by problems in the housing market. It raised its loan loss reserves to $5.2 billion from $3.4 billion three months earlier.
At the end of the quarter about 1.15% of single family homes it backs were seriously delinquent. That’s up from the 0.98% that were that far behind at the end of 2007.
“This is likely to be the story for the months ahead – a painful cure from the housing correction – and incredibly healthy opportunities from our resurgent role at the center of the recovery,” said Mudd in the company’s statement. “Both are happening at the same time.” 
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