Freddie Mac will pay $7 billion to the Treasury Department after reporting the second-largest quarterly net income in the company's history.

The government-sponsored enterprise, which has operated under federal conservatorship since it was seized in 2008, had net income of $4.6 billion for the three-month period that ended March 31, according to a statement released today as part of the McLean, Virginia-based company's regulatory filing.

"Not surprisingly the strong rebound in the housing market of which we're all aware continued to be reflected in our excellent financial performance in the first quarter," Freddie Mac Chief Executive Officer Don Layton said on a conference call with reporters.

Freddie Mac finished the first quarter with net worth of $10 billion and is required to pay everything above $3 billion to Treasury in return for taxpayer aid under conservatorship. The company and Washington-based Fannie Mae have received almost $190 billion in assistance since they were seized amid losses that pushed them toward insolvency.

They returned to profitability as the housing market recovered, with Fannie Mae's net income last year exceeding that of companies such as Wal-Mart Stores Inc., General Electric Co. and Berkshire Hathaway Inc., according to data compiled by Bloomberg.

U.S. home prices climbed at the fastest pace since May 2006, rising 9.3 percent in February from a year earlier, according to an April 30 report by the S&P/Case-Shiller index of property values.

Freddie Mac and Fannie Mae this year ceased paying 10 percent dividends that have returned $65 billion to Treasury and will instead turn over any profits above a permitted capital reserve.

Payments to Treasury by the two companies through fiscal year 2023 are projected to exceed by $51 billion the aid they have received under conservatorship, according to President Barack Obama's spending plan released last month. Last year's budget saw a $28 billion loss through 2022.

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.

Hedge funds including Paulson & Co. Inc. have been pushing Congress to abandon plans to wind down Fannie Mae and Freddie Mac as investors buy up preferred stock that has been soaring after being considered probably worthless, people with knowledge of the discussions have said. Employees are also pondering the firms' futures.

"We have been looking past conservatorship," Paul E. Mullings, a Freddie Mac senior vice president who heads its single-family business, said May 6 during a panel discussion at an industry conference in New York. "Freddie Mac is getting ready for a post-conservatorship world, whenever that time comes."

The company, which last month hired former JPMorgan Chase & Co. mortgage chief David Lowman to take over Mullings' post as it builds for the future, will have sent the Treasury a total of $36 billion with its latest remittance, after drawing $72 billion in aid, Layton said.

"While we expect that the housing recovery will continue to bolster our financial performance, we are also taking further steps to improve the business fundamentals," Layton said. At the same time, "we're very clear here inside the company that our future is in the hands of policy makers and the government."

Still, many ideas on how to reform the mortgage-finance system "would have our company continuing, if not in its current form," and any transition will probably take years, so "we're encouraged to invest in our systems and processes, to do things on a long-term basis," he said.

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