Most people have forgotten that we nationalized the GSE's last year. Yet the cost of that nationalization is only growing larger and more expensive.
(CNNMoney.com) -- Fannie Mae, the troubled mortgage finance company, reported a first-quarter loss of $23.2 billion on Friday.
The mortgage giant also reported that it submitted a request for $19 billion from the Treasury Department to cover its losses. That followed a request earlier this year for $15.2 billion to cover 2008 losses.
It also said Treasury has doubled its support level to the company to $200 billion, as President Obama had authorized.
A hundred billion here, a hundred billion there. Pretty soon we are talking about real money.
Going forward, the mortgage giant said that it fully expects to ask for more financial support from the federal government.
"Due to current trends in the housing and financial markets, we expect to have a net worth deficit in future periods, and therefore will be required to obtain additional funding from the Treasury," said the company, in its quarterly report.
Fannie Mae said it imposed a moratorium on foreclosures for most of the quarter. But that failed to stop foreclosures from increasing, compared to the prior quarter. The company said it acquired 25,374 single-family homes through foreclosure in the first quarter of 2009, compared to 20,998 in the fourth quarter, 2008.
"I think Fannie Mae is largely used as probably the single largest tool of the government right now to try and reverse the losses in the mortgage market," said David Ursani, analyst for Wall Street Strategies. "As a result of that, a lot of those losses are funneling through [Fannie Mae.]"
Ursani said it's difficult to tell when Fannie Mae's situation will improve, given its unusual status as a government-supported entity, and the dismal state of the mortgage market.
"Fannie Mae, right now, is pretty much part of the government," he said. "I can't really see it becoming independent from the government anytime soon."
And there you have it. The GSE's are the government's tool to propping up an unsustainable housing bubble, thus its losses will continue to increase as long as the housing bubble deflates.
But it doesn't end there. If you thought losing $23 Billion in a single quarter was bad, look at what the results should have been at its GSE competitor Freddie Mac.
Freddie Mac has received a favorable ruling from the Securities and Exchange Commission that will allow it to avoid what the company had feared might be a $30 billion charge against earnings, John Koskinen, acting chief executive officer, said in an interview.