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Fannie Mae on Monday posted a $29 billion loss in the third quarter as it took a massive tax-related charge, and said it may have to tap the government’s $100 billion lifeline in the coming months.

The mortgage finance company, seized by federal regulators more than two months ago, posted a loss of $13 per share for the July-September quarter, mainly due to a $21.4 billion non-cash charge to reduce the value of tax assets. That compares with a loss of $1.4 billion, or $1.56 a share, in the year-ago period.

Analysts surveyed by Thomson Reuters had expected a loss of $1.60 per share.

Washington-based Fannie Mae’s (FNM, News) net worth - the value of its assets minus the value of its liabilities - fell to $9.4 billion at the end of September down from $44.1 billion at the end of last year. If that number turns negative, Fannie Mae would be forced to obtain funding from the Treasury Department.

The ultimate bill for taxpayers remains unclear. Jim Vogel, a debt analyst with FTN Financial in Memphis, Tenn., said total aid for Fannie and its sibling company Freddie Mac is unlikely to exceed the $200 billion initially pledged by the government.

Despite worsening housing market conditions, Fannie Mae is “still setting aside way more for future losses than they’re absorbing today,” Vogel said.

Others aren’t so sure. Barclays Capital analyst Rajiv Setia said the government’s arrangement with Fannie and Freddie “may need to be amended” next year. Many analysts consider Freddie Mac, which is expected to report earnings later this week, to be in worse financial shape.

The real estate industry is also waiting to see if the government, under President-elect Barack Obama, will use Fannie and Freddie to help alleviate the foreclosure crisis by aggressively modifying or refinancing loans. Together, Fannie Mae and Freddie Mac own or guarantee around half of U.S. home loans.

“They’re no longer being run for profit,” said Fox-Pitt Kelton analyst Howard Shapiro.

Fannie Mae posted a loss of $13 per share for the July-September quarter, mainly due to a $21.4 billion non-cash charge to reduce the value of a tax asset and $9.2 billion in expenses resulting from falling home prices and surging defaults.

Fannie Mae, which has bled $33.5 billion in red ink so far this year, is now run by CEO Herbert Allison, formerly chairman and chief executive of retirement fund manager TIAA-CREF. Fannie Mae’s former top executive, Daniel Mudd, was ousted as part of the government takeover.

Fannie and Freddie are now facing a federal grand jury investigation into their accounting practices.

Last month, Fannie Mae said it would change its accounting for its deferred-tax assets, which can result from operating losses and be used to offset taxes on future profits. But Fannie may not have any profits for a long time to come, the company said.

The U.S. housing market is continuing to decline. Fannie Mae posted $9.2 billion in credit losses, up from $1.2 billion in the quarter a year earlier. Delinquent loans rose to 1.7 percent of all single-family loans - double the level last fall.

Fannie Mae owned more than 67,500 foreclosed properties at the end of September, up 25 percent from the end of June.

Shares fell 2 cents to 72 cents in Monday trading.

Gov. Arnold Schwarzenegger on Monday said he has no regrets about calling lawmakers back to work and is confident they will be able to address California’s $11.2 billion budget deficit.

In declaring a special legislative session last week, the governor proposed a 1 1/2-cent sales tax increase and $4.5 billion in spending cuts.

Schwarzenegger may hope that lawmakers facing the end of their terms will be more willing to approve a tax hike.

In all, 32 lawmakers are being termed-out, one more if counting Sen. Carole Migden, D-San Francisco, who will be forced out of her seat early after losing her re-election bid to Assemblyman Mark Leno, D-San Francisco.

The new Legislature will be seated on Dec. 1.

“Why would I go with legislators that are complaining, ‘Why do I have to go back now to work again? I thought that I’m finished.’ Well, hello? You’re all getting paid still,” he said.

Schwarzenegger made his remarks after a tour of the Lawrence Livermore National Laboratory’s National Ignition Facility, the world’s largest laser. The governor also was briefed on an experimental technology that could use a similar laser system to generate carbon-free electricity.

Just weeks ago, Schwarzenegger signed an overdue state budget that was intended to close a $15.2 billion deficit with program cuts, accelerated tax collections and accounting gimmicks.

The rapid pace of decline in the national and state economies since then has reopened an $11.2 billion gap that threatens to widen even further.

Last week, Schwarzenegger proposed $4.5 billion in spending cuts to schools and social service programs and $4.7 billion in new revenue. That included the sales tax hike, which would last for three years.

Schwarzenegger also outlined a plan to expand the sales tax to more services. That would include vehicle repairs, appliance and furniture repairs, veterinarian services and even greens fees for playing golf.

On Monday, he said he expected “lively debates” about potential solutions but in the end believed lawmakers would act responsibly.

“I think that it will work. I think that everyone wants to go out and say, ‘We have really accomplished a lot and we have fixed the problem,’” he said.

Schwarzenegger’s proposal faces criticism from Democrats and Republicans.

Assembly Speaker Karen Bass, D-Los Angeles, said she would oppose some of the governor’s cuts to social service programs. Republicans, a minority in both houses but needed to pass budgets and tax hikes, remain steadfastly against raising taxes.

Schwarzenegger and the legislative leaders from both parties met late Monday afternoon but did not report any progress in resolving the deficit.

LandAmerica Financial Group Inc. lost $599.6 million during the third quarter, laid off nearly 1,000 employees and was in danger of defaulting on its debts, the company said in a regulatory filing that sheds light on the company’s motivation for a planned merger with rival Fidelity National Financial Inc.

All five of the nation’s biggest title insurers were in the red during the third quarter, but LandAmerica’s losses were far greater than any of its competitors. The company last week postponed the scheduled release of third-quarter earnings, before announcing plans to merge with Fidelity.

LandAmerica said today the severe downturn in the housing and mortgage markets has “placed a significant strain on the company’s liquidity and capital resources to the point that it has become increasingly difficult … to remain an independent public company.”

Auction rate securities held for 1031 exchange customers have become illiquid, the company said, placing demand on cash needed for operations. LandAmerica said the company was in violation of financial debt covenants of its note purchase agreement and credit agreement, and was in discussion with creditors to obtain waivers.

If not waived by lenders, the covenant violations “constitute an event of default under the agreements, giving the lenders the right to declare all principal and accrued interest payable immediately,” LandAmerica said. A declaration for immediate payment under either agreement also would constitute an event of default under LandAmerica’s convertible note obligations, the company said, enabling the holders of the notes to demand immediate payment.

Most of LandAmerica’s third-quarter loss was the result of $462.4 million in non-cash write-downs of goodwill, intangible assets, investments and tax-deferred assets. The company took a $224.9 million write-down for goodwill and other intangibles reflecting the company’s depressed share price, for example.

But revenue for the quarter was down 30.3 percent from a year ago, and worsening trends in paid claims forced LandAmerica to boost loss reserves by $90 million. Claims provisions as a percentage of operating revenue for the title operations segment hit 23.5 percent, up from 9.9 percent a year ago.

Direct revenue from title and non-title commercial operations were down 40.1 percent, outpacing the company’s efforts to cut costs. LandAmerica said it closed 60 offices during the third quarter and laid off the equivalent of 940 full-time workers, reducing salary and employee benefit expenses in the title operations segment by 32 percent. Since the beginning of 2007, LandAmerica said it has shed 5,260 employees, or 37.3 percent of its workforce.

Fidelity, which plans to acquire LandAmerica in an all-stock deal, recently reported a $198 million third-quarter loss after strengthening claims reserves by $261.6 million.

LandAmerica shareholders and antitrust regulators must sign off on the merger of the two companies, and Fidelity can also back out of the deal during a due diligence review period that ends Nov. 21 (see Inman News story).

Together, Fidelity and LandAmerica might control about 45 percent of the U.S. title insurance business, based on 2007 market share. The nation’s biggest title insurer, First American Corp., captured a 30 percent market share last year. If the merger goes through, Fidelity and First American could be expected to underwrite three out of four U.S. title insurance policies.

What’s an Obama administration, plus heavy new Democratic majorities in the House and Senate, going to mean for housing and real estate?

That’s the trillion dollar question in Washington this week — and nobody can give you the answers for sure. It’s way too early - there are two full months before inauguration day in January.

But between now and then, there are going to be some important indicators. Tops on the list: What gets done — if anything — during the upcoming lame duck session?

Officially Congress is scheduled to come back the week of November 17 to finish up loose ends on the legislative calendar.

Democratic leaders in both the House and Senate have said they’d like to push through an ambitious emergency economic stimulus plan - portions of which are likely to be aimed at keeping financially-distressed home owners out of foreclosures, and pumping up housing sales.

During the closing days of the campaign, Senator Obama did not say whether he favors trying to pass a stimulus bill through a lame-duck Congress where Republicans could influence or sabotage the results.

The logical alternative to that would be to put together his own plan and come back in January, with heavy Democratic majorities, and push it through as a dramatic way to jump-start his new administration.

But whatever the timing, you can count on several major Obama priorities:

Number one: Large-scale, systematic mortgage relief for home owners behind on their loans.

That package could include a freeze on all foreclosures by lenders for 90 days or more; mandates for banks and loan servicers to modify the terms of mortgages to prevent foreclosures; plus new powers for bankruptcy court judges to require lenders to reduce loan balances owed or cut interest rates.

The banking and mortgage lending industries strongly oppose changes like these — and that could be one of the first big battles the Obama administration wages on Capitol Hill.

You can count on quick passage of long-stalled Democratic bills on predatory lending, appraisal reform, plus a major effort to consolidate and strengthen the powers of financial regulatory agencies to oversee the mortgage and banking industries.

Don’t be surprised if you see President-elect Obama name some of his key cabinet members early — especially his nominee for Treasury secretary. This would allow the outgoing Bush officials to work with the incoming leaders on programs such as mortgage relief, and to have an orderly transition.

A white paper introduced during a National Association of Realtors committee seeks to clear up the murky issues associated with properties that are “re-listed” by Realtors.

The practice of re-listing for-sale homes — or temporarily pulling them off of the market and then reintroducing them as “new” listings — has been a controversial topic in the industry, and the white paper offers guidance for Realtors’ conduct while not mandating any new policies.

The paper notes that a “new listing” can have very different meanings for real estate professionals and consumers. Agents may refer to a home that they are working to sell as a “new listing” even if that home had previously been marketed by another agent but did not sell, for example, while consumers may view a new listing as a property that was offered for sale for the first time.

“In (a) broker’s mind, ‘listing’ means house and contract. But to buyers, ‘new listing’ likely suggests a house that’s just come onto the market,” the paper states. “That can result in confusion and misunderstanding. And confusion and misunderstanding can mean trouble.”

“Some multiple listing service participants have taken advantage of MLS rules and policies … to draw extra attention to properties listed with them,” the paper also notes, and listing brokers and agents sometimes re-list the same properties multiple times, causing those properties to appear as “new” listings over and over.

In these cases, “While the listing contract is technically ‘new,’ ” each time “the relationship between the seller and the listing broker is ongoing and continuous, and the listed property — in the eyes of reasonable consumers — is certainly not ‘new’ to the market.”

The paper, presented during a Professional Standards Forum at NAR’s annual conference, reminds members that NAR’s Code of Ethics requires all members to be “honest and truthful in their real estate communications” and “prevent a true picture in their advertising, marketing and other representations.”

Realtors can refer to re-listed properties as “back on market,” “price reduced,” “reintroducing” or “recently re-listed,” the paper suggests, and MLSs can choose to adopt classifications other than “new” for the listings of properties and use database technologies to automatically prevent the same for-sale properties from being identified as “new.”

None of the recommendations are “intended to restrict vigorous, innovative or creative methods of drawing attention to clients’ property,” the paper also states, though “client advocacy and promotion of their property must be accomplished using methods that square with the Code (of Ethics).”

Directors for the National Association Realtors on Monday formally signed off on a real estate stimulus proposal that calls for a temporary $7,500 first-time home buyer tax credit with no repayment requirement and a temporary federal buy-down of mortgage rates to 4.5 percent or less.

The group’s plan also calls upon the federal government to make permanent the temporary increase in FHA, Fannie Mae and Freddie Mac loan limits to $729,750 in high-cost areas. The limits are scheduled to roll back to $625,000 on Jan. 1.

The plan also reiterates the association’s long-standing aim to permanently block banks from engaging in real estate brokerage and management.

Dale Stinton, NAR CEO, said that the group’s proposal would cost an estimated $100 billion per year and for the temporary relief measures to run for two years.

Realogy Corp. floated the idea of government-financed interest-rate buy-downs in October, saying they could unleash pent-up consumer demand for housing (see story). Traditionally, sellers have used interest-rate buy-downs as an incentive, paying lenders extra points up front to obtain a reduced interest rate for a buyer, often for the first two or three years of a loan.

Stinton said NAR arrived at the 4.5 percent or lower interest-rate buy-down level as “a result of some surveys and focus groups and talking to some brokers around the country,” and that the group’s research indicates that a buy-down in interest rates to 3 percent to 4.5 percent would get the market rolling again.

“We think in a couple years things will come back to where they should be,” Stinton said. He said interest-rate buy-downs could be funded as a part of the $700 billion federal plan to bring liquidity back to the financial markets.

“It’s a small price to pay, in my opinion, to stop the hemorrhaging,” he said, as he said a more prolonged market slump could otherwise prove far more costly.

Stinton noted that past stimulus efforts fell short in getting “the demand side moving again.”

“We have to find a bottom to this market, from the real estate point of view and from an economic point of view,” he said.

Several directors proposed to amend the language in the four-point plan, though most amendments failed as NAR officials urged directors to adopt the given language as a starting point for federal lobbying efforts.

Although Congress is expected to consider passage of another stimulus bill when it returns for a “lame duck” session, some economists have recommended that it focus on government-funded infrastructure projects like roads and bridges that create jobs and stimulate spending (see story).

Also at the NAR board of directors meeting, association officials announced the approval of the charter for the group’s federal credit union launched by the group.

The group’s budget, approved at the meeting, anticipates that membership could drop to about 1.06 million in 2009, down from an earlier projection of about 1.08 million. The revised projection is also down from a peak membership of 1.36 million in 2006 and a level of 1.24 million as of Oct. 31, 2008.

Lower mortgage rates and stability in property prices are likely to bring in liquidity into the market, thereby making the properties more affordable, predict experts.

The Managing Director -Equity Research for Al Mal Capital, Robert McKinnon said that affordability being a major concern today, for the Dubai property market to get back in action, two solutions are possible -first being lowering of the lending rates, and second is to lower the property prices.

At present only about 20 percent of the population are able to afford a Dh.3million property. Property prices should decrease, if new people have to come forward and purchase properties. The ongoing financial crisis has brought about several international investors into the market, and with the tightening liquidity situation and the new regulations by RERA (Real Estate Regulatory Authority), it is crucial to retain the end-user interest in the market for achieving sustainable growth, said McKinnon.

In the opinion of McKinnon, Banks are already exposed to sufficient liquidity, and the government has been responsive enough to meet their requirements. If the property prices were lowered for a short-term, the lending institutions and banks would be more confident to lend higher loan-to-value.

The CEO of Mag Property Development Company, Mohammed Nimer, agrees that with the property sales slowing down in Dubai, the Government will have to protect the interest of developers, and bring about a balanced solution so as to not dampen the market.

The last date for registration of off-plan properties, under the pre-registration system, by the Dubai developers has been extended till the year-end. Earlier the first week of November was declared as the deadline for registration of off-plan properties.

According to a senior government official, the projects launched prior to introduction of pre-registration system, being sold as off-plan now, will have to register by the year-end. Stringent measures would be taken against those failing to do so, the official warned.

The Assistant Director-General of Dubai Land Department, Mohammed Sultan Thani, said that following the issuance of Law No.13 of 2008, developers are required to register all their units before launch with the Land Department, and only then proceed with their sales.

The Law No.13 regulates initial property registration in Dubai, and aims to create further safeguard consumer interest in the Dubai property market through introduction of mandatory system of pre-registration at the Land Department for off-plan sale contracts of property units.

As per the new regulation, any off-plan sales without registration will remain invalid. Off-plan sale implies the sale of real estate units on the basis of architectural plan of the property prior to building the structure. The registration has to be done by the developer and not the first purchaser.

During the secondary sale, the seller will have to keep the department informed and register the deed by paying necessary charges. In case of home mortgages, banks will have to register the deals and not the mortgagee, Thani said.