Given that mortgage company discloses intends to raise $7 billion
(Fortune) -- Could Fannie Mae function as the next big economic business to announce huge amounts of bucks of market losses on bonds supported by troubled mortgages?
That truly appears feasible following the government-sponsored mortgage giant announced plans Tuesday to bolster money by attempting to sell $7 billion of new stock and cut its dividend by 30%. In a statement Tuesday regarding the money plan, Fannie Mae said it encountered a selection of mortgage-related losses, including market losses in the securities it holds.
The majority that is vast of Mae's mortgages are loans to borrowers with good credit, but in the last 5 years the us government sponsored enterprise became subjected to mortgages that have been designed to people who have poor credit - subprime mortgages - also to mortgages that have been created using incomplete documents of borrowers' income, called Alt-A mortgages in industry parlance.
A proven way that Fannie increased its contact with subprime and Alt-A mortgages would be to purchase bonds supported with your kinds of loans.