Fannie Mae loses $2.3B in 2nd Q

Fannie Mae, the giant government-backed mortgage financier, has reported a loss of $2.3 billion, or $2.54 a share, in the second quarter. The loss was three times as big as what analysts expected, as defaults increased the housing market continued to decline. The battered company said it would slash its dividend and hike fees. “Volatility and disruptions in the capital markets became even more pronounced in July,” said Daniel H. Mudd, president and chief executive officer, in a statement. “In addition, credit performance has continued to deteriorate and, based on our experience in July, we anticipate further increases in our combined loss reserves.” The housing rescue package signed by President Bush last week will pump huge amounts of cash into Fannie Mae and Freddie Mac.