Local Digest

More aid expected for Fannie, Freddie

Wednesday, May 26, 2010


More aid expected for Fannie, Freddie

Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, will require additional government aid amid losses stemming from the 2008 credit crisis, the nation's top housing regulator said in its annual report to Congress.

"While critical to supporting the ongoing functioning of the nation's housing finance system, the enterprises would be unable to serve the mortgage market in the absence of the ongoing financial support," Edward DeMarco, acting director of the Federal Housing Finance Agency, said in the report released Tuesday.

District-based Fannie Mae and McLean-based Freddie Mac, which own or guarantee half the loans in the $11 trillion U.S. mortgage market, operated as private companies before they were seized by the government amid soaring losses in September 2008. Since then, the companies have survived on a promise of unlimited U.S. aid, drawing $145 billion in Treasury Department funding.

Because the companies have tightened their underwriting standards, nearly all their losses are from loans made in 2005, 2006 and 2007, "during the height of the home mortgage boom," said DeMarco, who is scheduled to testify Wednesday at a House Financial Services Committee hearing.

-- Bloomberg News


Citi upgrades General Dynamics

General Dynamics, the Falls Church aviation and military equipment company, was upgraded by an analyst at Citi Investment Research analyst, who said its shares have fallen below fair value.

The shares have dropped about 17 percent since hitting a 12-month high on April 26. The Standard & Poor's 500-stock index has fallen about 13 percent since then, with the debt crisis in Europe rattling investors.

For the year, analyst Itay Michaeli said General Dynamics shares have done worse than shares of other aerospace and defense companies he covers by an average of 10.8 percent.

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