Uh-Oh!

Fannie Mae's (FNM) new numbers are out, and as taxpayers, we should all be very frightened by what we are seeing. From the Seeking Alpah article on the report:

The report (second quarter report) describes FNM’s exposure to problematic classes of mortgages on their book. That total comes to a whopping 0.9 Trillion. The total book of business is $2.7 Trillion, fully 32% of their book is troubled.

The report muddles with the actual holdings, as there are overlaps in the descriptions. The actual numbers they provide include:

• Negative Amortization Loans: $15b
• Interest Only: $196B
• Low Fico: $328B
• LTV>90%: $265B
• Alt-A: $269B
• Sub Prime: $8B

Those numbers add up to $1.2 trillion. This means that 50% of the loans in the book are troubled for two reasons. For example, $25 billion are loans that have high LTV and a FICO score less than 620. (AKA a “stinker”)