Fannie Mae unveils plan for new shares
The steeper slide in home prices is accelerating the pace of foreclosures, Fannie Mae said Tuesday as it outlined plans for shoring up its finances following a $2.2 billion first- quarter loss. While the nation's largest buyer of home loans will slice its dividend and attempt to raise $6 billion, mostly by issuing new shares, federal regulators loosened Fannie's capital requirements as the government looks for ways to bolster the housing market. Moody's Investors Service downgraded the company's financial strength rating because of the potential for further losses from soured home loans over the next two years, but investors pushed Fannie's shares higher, in anticipation of the bigger role Fannie will play in the mortgage market.
Lender admits errors
Mortgage lender Countrywide Financial Corp., which is under investigation for inflating certain borrowers' fees, acknowledged Tuesday that it has made errors and pledged to take steps to improve its operations. Steve Bailey, chief executive for loan administration at Countrywide, told a Senate panel that the company's employees have made mistakes "from time to time." He said the company will hire an outside auditor to review its actions in cases involving homeowners who have filed for bankruptcy court protection. But he disputed accusations made by hundreds of borrowers in Pennsylvania, Florida and other states that the company has sought to collect inflated fees and other payments by filing inaccurate bankruptcy documents. The Justice Department is investigating the accusations.
D.R. Horton Inc. said Tuesday it swung to a loss in the second quarter, as a sustained housing slump forced the nation's largest homebuilder to take hefty charges and write down the value of property. Fort Worth, Texas-based D.R. Horton posted a loss of $1.31 billion, or $4.14 per share, compared with year-ago profit of $51.7 million, or 16 cents per share. The latest period, reported Tuesday, includes pretax write-down charges of $834.1 million. Revenue plunged to $1.62 billion from $2.62 billion a year ago. On average, analysts surveyed by Thomson Financial expected a loss of 39 cents per share on revenue of $1.36 billion. Wall Street estimates typically exclude one-time charges or gains.
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