The company will "take a valuation allowance'' that is "likely to be substantially all of the value of its deferred tax assets'' as of Sept. 30, Fannie Mae said today in a statement.
According to company filings, Fannie Mae's $20.6 billion of deferred-tax assets as of June 30 accounted for almost half its $47 billion in regulatory capital.
Fannie and Freddie Mac, the two largest mortgage finance providers, were placed into conservatorship last month as the worst housing slump since the Great Depression sparked a surge in delinquencies and eroded their capital. Reducing the value of deferred tax assets would cut into Fannie's shareholder equity and capital, potentially increasing the need for the U.S. Treasury to use some of the $200 billion it set aside to bail out Fannie and Freddie.