Dec. 4 (Bloomberg) -- Fannie Mae, the largest source of money for U.S. home loans, cut its dividend 30 percent and said it will sell $7 billion of preferred stock to bolster capital as the housing crisis deepens.
The quarterly payout will drop to 35 cents a share from 50 cents starting in the first quarter, Washington-based Fannie Mae said in a statement today. The government-chartered company plans to issue the preferred stock later this month.
The worst housing slump in at least two decades will hurt fourth-quarter earnings ``in a material way'' and continue to weigh on 2008 results, Fannie Mae said. The decision to shore up capital follows a similar move last week by McLean, Virginia-based Freddie Mac. Fannie Mae said last month it had a capital cushion of $2.3 billion after reporting a quarterly loss of $1.4 billion.
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