Fannie Mae seeks $8.5 billion more in federal aid

By DANIEL WAGNER
AP Business Writer

WASHINGTON (AP) – Fannie Mae asked the government for an additional $8.5 billion in aid after declining home prices caused more defaults on loans guaranteed by the mortgage giant.

The company said it lost $8.7 billion in the first three months of the year. Those losses led Fannie to request more than three times the federal aid it sought in the previous quarter. The total cost of rescuing the government-controlled mortgage buyer is nearing $100 billion – the most expensive bailout of a single company.

Combined with the bailout of sibling company Freddie Mac, the government expects their rescue to cost taxpayers about $259 billion. That money will cover the mortgage giants’ losses on soured loans made in the midst of the housing bubble.

“We expect our credit-related losses to remain elevated in 2011 as we continue to be negatively impacted by the prolonged decline in home prices,” President and CEO Michael Williams said in a statement.