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Fannie Mae asks for more federal aid after Q1 loss

NEW YORK, May 10 (Reuters) - Fannie Mae, the largest U.S. residential mortgage provider, on Monday reported a net loss of $13.1 billion in the first quarter and said it tapped the Treasury for additional aid of $15.3 billion. Its regulator, the Federal Housing Finance Agency, has asked for $8.4 billion more before June 30 from the Treasury for Fannie Mae to eliminate its net worth deficit as of March 31. With that draw, Fannie Mae will have received $84.6 billion in federal aid. The company said it expects default rates and credit-related costs to remain heightened this year with housing still weak, saying there is "significant uncertainty as to our long-term financial sustainability." The first quarter net loss included a $1.5 billion dividend on its senior preferred stock held by the Treasury Department, which on December 24 opened credit access to Fannie Mae as well as its counterpart Freddie Mac for three years. The quarterly loss was smaller than the total $16.3 billion in the fourth quarter. Fannie Mae said federal aid is helping keep the company solvent but the divididends payments it is incurring are substantial. "Given our expectations regarding future losses and draws from Treasury, we do not expect to earn profits in excess of our annual dividend obligation to Treasury for the indefinite future," the company said. Due to current trends in housing and financial markets, Fannie Mae expects to continue having a net worth deficit in future periods, and to need to tap more funding from the Treasury. The U.S. government took both Fannie Mae and Freddie Mac into conservatorship in September 2008 as loan defaults and foreclosures ate into their capital. The government has relied heavily on both companies, which buy mortgages from lenders to stimulate more lending, to stabilize the housing crisis. (Reporting by Lynn Adler, Editing by Chizu Nomiyama) Keywords: FANNIEMAE/RESULTS (lynn.adler@thomsonreuters.com; +1 646 223-6307; Reuters Messaging: lynn.adler.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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