Fannie Mae shares rise, reverse split considered

NEW YORK - Shares of mortgage lender Fannie Mae surged 63 percent Friday after the company said it is considering a reverse-stock split to help meet New York Stock Exchange listing requirements.

Fannie's shares also could have gotten a boost from light trading on the holiday-shortened trading day. With the market closing three hours early at 1 p.m. EST, and many traders gone for a long holiday weekend, volume was lighter than normal. Light trading volume can exacerbate market moves.

Fannie's shares jumped 45 cents, or 63.4 percent, to $1.16 Friday. Its shares, however, have lost 84 percent of their value since the government seized control of the company in early September.

Wednesday, Fannie Mae notified the NYSE it plans to bring the share price of its common stock in line with listing standards. One option could be through a reverse-stock split, which reduces the number of outstanding shares and increases the per-share price proportionately.

Fannie Mae said it was working with its regulator, the Federal Housing Finance Agency, to determine how to lift the share price.

Like most mortgage companies, Fannie Mae has been hit hard by the downturn in the mortgage and credit markets. The mortgage company was taken over by the government, along with fellow mortgage guarantor Freddie Mac, earlier this year as it struggled with mounting losses from rising mortgage defaults.

Fannie Mae has until May 11 to bring its share price and its average share price for 30 consecutive trading days above $1.

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