Yesterday, Fannie Mae reported a $23.2 billion loss for the first quarter of 2009, the seventh straight quarterly loss, resulting in a net worth deficit of $18.9 billion (after taking into account a decrease in unrealized losses on available-for-sale securities). As a result, the Director of the Federal Housing Finance Agency, who serves as conservator for Fannie Mae, has submitted a request to Treasury on Fannie Mae's behalf for $19.0 billion in funding under the terms of last year's Senior Preferred Stock Purchase Agreement "in order to eliminate our net worth deficit." Treasury's agreement was established when Fannie Mae was placed into conservatorship in September 2008, and Treasury's preferred stock commitments were increased as part of the Homeowner Affordability and Stability Plan from $100 billion to $200 billion. In March, Fannie Mae drew down $15.2 billion on Treasury's commitment.

Fannie Mae stated that the first quarter loss was "driven primarily by $20.9 billion in credit-related expenses, securities impairments of $5.7 billion, and fair value losses of $1.5 billion, as persistent deterioration in housing, mortgage, financial and credit markets continued to adversely affect our financial results." Although the first quarter loss is down slightly from the $25.2 billion loss for the fourth quarter of 2008, Fannie Mae stated that "[d]ue to current trends in the housing and financial markets, we expect to have a net worth deficit in future periods."

In its Form 10-Q filing with the Securities and Exchange Commission, Fannie Mae struck an even more pessimistic tone, stating that "[v]irtually all fundamental measures of the housing market’s health worsened in the first quarter of 2009 compared with the fourth quarter of 2008. The market experienced declines in new and existing home sales, housing starts and home prices, as well as increases in mortgage delinquencies." Despite "some tentative signs of improvement," Fannie Mae cautioned that "there is significant uncertainty regarding the full extent of future credit losses in the mortgage industry as a whole, as well as to any participant in the industry." After reviewing its outlook and the role it has played and anticipates continuing to play in supporting the residential mortgage market and struggling borrowers, Fannie Mae stated that "there is significant uncertainty as to our long-term financial sustainability."