Fannie Mae, the largest U.S. mortgage and finance company, cut its dividend 80 percent after posting a loss that was more than three times analysts’ estimates and said the worst housing slump since the Great Depression is deepening, Bloomberg reported.



Fannie Mae stock dropped as much as 18 percent in New York Stock Exchange trading after the company reported a second-quarter loss before extraordinary items of $2.51 a share, compared with the 72-cent loss that was the average estimate of 10 analysts in a Bloomberg survey. The common-stock dividend will be cut to 5 cents from 25 cents a share, the company said.

Fannie Mae, which owns or insures about 25 percent of all U.S. mortgages, set aside $3.7 billion to cover delinquencies as home prices drop, up 16 percent from last quarter. CEO Daniel Mudd forecast a “significant” increase in reserves for the rest of the year as the housing market deteriorates.

The results, combined with a loss by Freddie Mac that was also more than analysts had anticipated, may boost the need for Treasury Secretary Henry Paulson’s bailout plan announced last month, Bloomberg said.

The share price of Fannie Mae and Freddie Mac have plunged more than 80 percent in New York trading this year on concern they may not have enough capital to withstand record foreclosures on the $5.2 trillion of mortgages they own and guarantee.

Fannie’s net loss was $2.3 billion, or $2.54 a share, including a $476 million tax gain. That compares with net income of $1.95 billion, or $1.88 a share, in the same quarter a year ago.