At Fannie Mae’s not-so-annual meeting held in Washington today, president and CEO Daniel Mudd told shareholders that he doesn’t expect a housing market recovery until late 2009 “at the earliest.”
“This is the worst housing and mortgage market in recent memory, and we are still working our way to the bottom, in our view,” Mudd added.
His grim estimate is probably the worst of a slew of recent predictions made by executives and analysts, with others seeing a recovery as soon as mid-2008 and early 2009.
Mudd blamed recent housing woes on unaffordable prices, and said average home prices will decline another four to five percent in 2008.
“With the decrease of affordability, a lot of those products grew up to get payments down,” he said, with respect to the recent surge in subprime lending.
At the same time, Mudd assured investors that the mortgage financier “will weather the turbulence of today’s mortgage market and prosper when better conditions return,” claiming the company had made a series of improvements over the past three years.
Fannie posted a third-quarter loss of $1.4 billion, prompting the largest purchaser and guarantor of U.S. home mortgages to cut its dividend by 30 percent and sell $7 billion in preferred stock to raise capital.
“We have to have a solid and conservative capital position to go into a market this challenging,” he said.
Interestingly, it was Fannie Mae’s first annual meeting since May 2004, five months before the accounting scandal rocked the company and led to the ousting of its top executives.
The good news is borrowers will have ample time to up their credit scores and get their asset and income documentation in order for the coming housing bonanza of 2010.