This is the B side of the blog item I wrote a few days ago, called Suddenly everybody loves Fannie and Freddie. In that item, I worried that Congress was underestimating the risks facing Fannie Mae and Freddie Mac. Well, maybe Congress is still in Fannie and Freddie’s camp, but investors are getting much less so.
Credit to a competitor: Writing for Fortune.com yesterday, Fortune magazine senior writer Peter Eavis pointed out that Fannie Mae has changed its accounting in a way that could mask some of its credit losses. Fannie Mae called a news conference today to explain its side of the story but investors weren’t entirely persuaded, judging by the stock’s performance. Shares fell $4.78 on Thursday and $2.35 today for a two-day decline of 15% and a decline since mid-October of close to 30%.
I listened to the conference call and didn’t get much out of it, either. You can listen it to yourself, if you have a lot of patience, at www.fanniemae.com. Most of the analysts who called in were excruciatingly polite to the Fannie Mae speakers, but one expressed his annoyance: “I would point out to you that your stock is down 25% since the earnings call. … To be honest with you, this isn’t very helpful.”
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.