Losses from Fannie Mae, Freddie Mac seizures may near $400 billion

Federal Housing Finance Agency is seeking billions in repayment from banks that sold bad loans to the mortgage giants to help offset taxpayer losses, but some financial institutions are balking.

By Jim Puzzanghera,
Los Angeles Times
September 16, 2010

Reporting from Washington

Taxpayer losses from the government seizure of failed housing finance giants Fannie Mae and Freddie Mac could reach nearly $400 billion, but likely won't top that level as some had feared, the firms' federal regulator said Wednesday.

To offset some losses, the Federal Housing Finance Agency is seeking billions of dollars in repayment from banks that sold bad loans to the firms, acting director Edward J. DeMarco said.

Some banks are balking, and the agency is considering tougher action, DeMarco said. But he did not specify what steps might be taken.

The bailouts of the two former government-sponsored enterprises, which continue to keep the mortgage financing market afloat almost single-handedly, already have reached $148.2 billion as bad loans they purchased during the real estate boom continue to fail.

(More here.)