Fannie Mae taps $16B in bailout funds

WASHINGTON, Jan. 27 (UPI) -- The mortgage giant Fannie Mae says it will seek to tap up to $16 billion in previously approved U.S. Treasury bailout funds.

The move, announced Monday, marks the first time the government run mortgage firm has requested to dip into the $100 billion each that federal officials pledged last year to keep it and its sister firm, Freddie Mac, afloat, The Washington Post reported.

Fannie Mae officials say its need for cash reflects a worsening economic picture that has seen the value of mortgage-backed derivative securities it owns plunge as homeowners struggle to pay their home loans and more properties have gone into foreclosure. Fannie Mae has to report this decrease in value as a loss, necessitating the cash influx to shore up its bottom line, the Post said.

Fannie Mae and Freddie Mac posted a combined $54 billion in losses in the third quarter of 2008, filings indicate.