NEW YORK (CNNMoney.com) -- Mortgage finance giant Fannie Mae, in another sign the nation's housing problems are persisting, reported a much larger-than-expected loss in the second quarter and slashed its dividend on Friday.
The company signaled that its loss rate on its business will double in the second half of the year, and that it will see huge losses through next year because of the continued decline in home prices and rising mortgage foreclosures and delinquencies.
Its executives said the firm will pull back from some segments of the mortgage market and limit its overall growth. Such moves might help Fannie stem its losses but could make it more difficult and expensive for some home buyers to get financing - and that in turn would likely add to the downward pressure on home prices.
Overall, the firm issued a gloomier outlook for the housing market. It said prices are only two-thirds of the way through their eventual full decline. Prices have declined 13% through the end of June from their peak in 2006, and will fall close to 19% before they reach bottom.
"The housing market has returned to earth fast and hard," CEO Daniel Mudd said in a conference call. Uncertainty about the market made it impossible to say "what inning we're in" or when prices would reach bottom,' he said.
"There is progress but we have a long way to go," Mudd added.
