Fannie Mae, the mortgage financier seized by U.S. regulators in 2008, will pay the Treasury Department $10.2 billion after reporting its sixth consecutive quarterly profit on continued recovery in the housing market.
The government-sponsored enterprise, which is operating under federal conservatorship, had net income of $10.1 billion for the three-month period that ended June 30, according to a statement released today.
"Fannie Mae reported a strong second quarter in 2013 driven primarily by continued stable revenues and boosted by a significant increase in home prices in the quarter, which resulted in a reduction in the company's loss reserves," the company said in the statement.
After its latest payment, Washington-based Fannie Mae will have sent the Treasury a total of $105 billion, compared with the $117.1 billion of aid the company has received. Freddie Mac, which yesterday reported a $5 billion quarterly profit, will have paid about $41 billion after drawing $72 billion.
Don Layton, Freddie Mac's chief executive officer, said his McLean, Virginia-based company may send Treasury as much as $28.6 billion within the next two quarters if tax credits it holds have value based on expectation of continued profitability.
Fannie Mae and Freddie Mac have returned to profitability as the housing market recovered and they raised fees for loan guarantees. Fannie Mae's net income last year exceeded that of companies such as Wal-Mart Stores Inc., General Electric Co. and Berkshire Hathaway Inc., according to data compiled by Bloomberg.
The two companies were seized in September 2008, shortly before the failure of Lehman Brothers Holdings Inc. and the rescue of American International Group Inc., amid losses that pushed them toward collapse. They ceased this year paying 10 percent dividends that returned $65 billion to Treasury and now turn over any profits above a permitted capital reserve.
Fannie Mae and Freddie Mac, which were created by the federal government before becoming publicly traded companies, buy mortgages from lenders and package them into securities on which they guarantee payments of principal and interest.
President Barack Obama on Aug. 6 called for the two companies to be replaced with a government mortgage reinsurer that would sustain losses only in catastrophic circumstances.
Hedge funds including Paulson & Co. Inc. have been pushing Congress to abandon plans to liquidate the companies as they buy up preferred stock that has been soaring after being considered worthless, according to people with knowledge of the discussions. Some owners of preferred shares have sued the U.S. government, charging that some of the companies' profits should eventually go to stockholders.
