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Subprime Turmoil Boosts GSE's Market Share.
WASHINGTON -- The turmoil in the subprime market has boosted Fannie Mae's share of the mortgage market to 38%, up from a 25% share in 2006, according to the mortgage company.
"We see opportunity ahead for both our business and for gaining market share," Fannie president and chief executive Daniel Mudd told investors and Wall Street analysts during a conference call last week.
But the CEO also cautioned that Fannie is not immune from the problems in the housing market and he expects to see higher credit losses going forward.
"We are the largest player in the mortgage market and as the market adjusts, I would expect we will take some lumps," he said in discussing the company's outlook and 2006 financial results.
Fannie economists expect the downturn in the housing market will lead to a 2% decline in house prices this year and a 4% decline next year nationwide as the inventory of unsold homes hits records levels. In addition, resets on subprime mortgages will continue into 2008 causing more foreclosures.
However, the Fannie Mae chief stressed that the company has rebuilt its accounting and internal controls and the remediation process from its accounting scandal is nearly complete.
"We are in a good position to navigate through a pretty challenging market and to manage this company through the bottom of the cycle," Mr. Mudd said.
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