Mortgage and finance company Fannie Mae (OTC: FNMA) announced today that it has cut its gross domestic product (GDP) growth projection for 2012. It cited weak spending and an uncertain job market as its reasons. GDP growth had decreased from 2.2% to 2%, even though the housing market continues to shine. In fact, housing has been the “rare upside boost” to the economy.
Despite a 9% increase of home sales compared to this time last year, the company says the levels are still below normal. Residential investment is also expected to increase this year.
Another news story today claims that DeKalb County, Georgia, is suing Fannie Mae for not paying real estate transfer taxes on properties. Fannie Mae claimed to be a government entity and therefore exempt from having to pay taxes, even though it is a publicly-traded corporation.
Fannie Mae has been operating under conservatorship since 2008, after investing in risky loans that left it virtually unable to pay its debts. The conservatorship status allowed Fannie Mae to continue operations after receiving billions of dollars in aid from the U.S. Treasury. However, another press release today announced that Fannie Mae has hired a consulting firm to bring the company into receivership status. This would involve selling the company’s assets.
The company closed at $0.24 Friday, and opened at the same price this morning. After a slight rise to $0.241 and dropping to $0.226, the stock settled at $0.23 when the closing bell rang. The stock suffered a $0.1, or 4%, drop from Friday’s close. The stock has been as low as $0.1950 in the past year. The stock reached its 52-week high of $0.3930 on February 16, 2012. It declined to $0.2860 on February 22, 2012, and has seen much back-and-forth activity since then.
Volume was slightly higher today compared to the daily average of more than 1.6 million shares. Nearly 2.1 million shares were traded today, but still not even close to the more than 32 million shares traded on February 6, 2012. February 2012 was a busy month for Fannie Mae, with many days of volume exceeding six million shares.
Fannie Mae has not been heavily promoted since July and August 2010. It received a couple mentions in a penny stock newsletter in April 2011. With the company in financial jeopardy and the recent bad publicity, the outlook for Fannie Mae appears bleak. Perhaps some good news will come its way, leading to upward activity.
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