Fannie Mae: National, Bad Credit Florida Mortgage Loans Rose in 2006

Fannie Mae, the nation’s largest source of home loan funding, increased its share of risky subprime national and Florida mortgage loans through 2006, although to a smaller degree than other institutions.
As the share of higher-risk bad credit Florida home loans increased from 2003 through mid-2006, “our purchase and securitization of loans that pose a higher credit risk… also increased, although to a lesser degree than many other institutions,” the company said in a securities filing.

About 12 percent of the company’s single-family book of business was higher-risk Alt-A mortgages as of the end of June, Fannie Mae said. About 2.2 percent of its book was subprime as of the end of June.

The company said it expects to see higher delinquencies and credit losses this year compared with 2006 and that it faces concentration risk as other mortgage industry companies fail, which should shift business to Fannie Mae.

The company also said that as of the end of 2006, it identified eight material weaknesses in its internal control systems and that those weaknesses could harm investor confidence.

Fannie Mae has tried to rebuild its internal controls since an accounting scandal hit in 2004.