Fannie follows Freddie -- raising $7 bln and cutting its divvy

Fannie Mae has just announced that it will cut its common stock dividend by 30% (to 35 cents a share per quarter). It will also sell $7 billion of non-convertible preferred stock to beef up its capital position. So how's business? As you might expect, not so good. Here's an excerpt from Fannie Mae's statement:

"The company continues to believe that the worsening housing and credit markets, continued losses on certain guaranty contracts, substantial credit-related expenses, and fair value losses on derivatives and securities will adversely affect in a material way the company’s fourth quarter 2007 results. In addition, the company continues to believe that conditions in the housing and credit markets, including expected further declines in home prices, will negatively affect the company’s financial condition, and results of operations in 2008. Overall economic conditions in 2008 could also materially affect future performance."