Santa Ana-based First American Corp. said on Tuesday its $37.9 million investment in Fannie Mae and Freddie Mac will decline in value because of this week’s takeover of the mortgage investors by the government.
The title and business information company said it holds $30.3 million of Fannie Mae’s perpetual preferred securities, and an additional $7.6 million of perpetual preferred securities in Freddie Mac.
Perpetual preferred securities are investments that pay quarterly dividends but don’t give the holder voting rights that come with stock.
First American said it doesn’t hold any common stock issued by Fannie Mae or Freddie Mac.
The company, which counts a market value of about $2.6 billion, said it would take a non-cash charge to its third-quarter earnings related to the Freddie and Fannie investments.
The amount of that write-down wasn’t disclosed.
“The value of these securities has decreased materially and it is unclear if and when the value will improve,” First American said in a statement.
The government this week placed Fannie and Freddie into conservatorship, replaced their chief executives and directors, and announced a plan to infuse billions of dollars into the companies.
