FT.com / Companies / Financial services - Fannie Mae predicts more turmoil

FT.com / Companies / Financial services - Fannie Mae predicts more turmoil: "Fannie Mae predicts more turmoil By James Politi in New York Published: August 16 2007 19:33 | Last updated: August 17 2007 01:52 Fannie Mae, the largest US home lender, on Thursday predicted further turmoil in the housing market, and warned that its credit loss ratio would increase this year. “Market factors that we believe will have a significant effect on our credit loss ratio primarily include lack of job stability or growth, declines in home prices and increases in interest rates,” Fannie Mae said as it filed its delayed annual report with US regulators. Fannie Mae said its credit loss ratio, which had already risen to 2.7 basis points of its total book in 2006, would likely move into its historical range of between four and six basis points this year. Fannie Mae reported $4.1bn in net income for 2006, down 36 per cent on 2005. Diluted earnings per share were $3.65. But Wall Street investors seemed comforted by Fannie Mae’s outlook, pushing the home lender’s shares up 6.2 per cent to close at $65.28. “Though the housing market continues to cool in 2007 and the credit environment remains challenging, I believe Fannie Mae is well situated for the future,” said Daniel Mudd, chief executive."