Written by Associated Press
(AP) — Sweeping changes to U.S. tax law led to a $6.53 billion loss at Fannie Mae last quarter, putting the government-controlled mortgage company in the position of seeking cash assistance from taxpayers for the first time since it emerged from the housing crisis six years ago.
Fannie Mae said Wednesday its net worth sank to a negative $3.7 billion after it had to “remeasure” its deferred tax assets to the tune of $9.9 billion as required by the Tax Cuts and Jobs Act, signed into law by President Donald Trump just before the end of the year.
Due to the tax charge, Fannie Mae reported 2017 net income of $2.46 billion for 2017, down from $12.31 billion in 2016. But its pretax income was $18.45 billion, slightly better than the $18.33 billion in 2016.
Many U.S. companies had similarly large accounting charges because of the new Republican tax law, which took effect Jan. 1.
“Our 2017 results demonstrate that the fundamentals of our business are strong,” said Fannie Mae President and CEO Timothy Mayopoulos. “While the fourth quarter was affected by a one-time accounting charge, we expect to benefit from a lower tax rate going forward.”
Washington-based Fannie Mae said it expects its federal regulator to request $3.7 billion from Treasury to offset its current deficit.
The government rescued Fannie Mae and sibling Freddie Mac during the housing crisis in 2008 with a combined $187 billion taxpayer bailout. Fannie Mae hasn’t taken money from Treasury since 2012, and has made more than $130 billion in dividend payments since 2013, more than repaying its $116 billion bailout.
The companies don’t make loans to homebuyers, but rather, buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors.