Fannie, Freddie post solid earnings for Q1
Marcy Gordon , AP
May 9, 2014, 12:01 am TWN
WASHINGTON--Government-controlled mortgage financers Fannie Mae and Freddie Mac posted solid earnings for the January-March period as the U.S. housing market continued to recover. Gains over recent quarters have enabled the companies to fully repay their taxpayer aid after being rescued by the government in 2008.
Fannie Mae reported Thursday that it earned US$5.3 billion in the first quarter. Fannie will pay a dividend of US$5.7 billion to the U.S. Treasury next month. With its previous payments totaling about US$121 billion, Fannie has more than fully repaid the US$116 billion it received from taxpayers.
Freddie Mac posted net income of US$4 billion for the first quarter. Freddie, based in McLean, Virginia, will pay a dividend of US$4.5 billion to the government. Freddie already had repaid its full government bailout of US$71.3 billion after paying its third-quarter 2013 dividend.
The government rescued Fannie and Freddie at the height of the financial crisis in September 2008 when both veered toward collapse under the weight of losses on risky mortgages. Together the companies received taxpayer aid totaling US$187 billion.
The gradual recovery of the housing market has made Fannie and Freddie profitable again. Their repayments of the government loans helped make last year's federal budget deficit the smallest in five years.
Fannie, which is based in the nation's capital, said its first-quarter profit was bolstered by a stable stream of revenue from the fees it charges banks and other mortgage lenders for guaranteeing home loans. The company said it expects “to remain profitable for the foreseeable future.”
The US$5.3 billion earnings compared with record net income of US$58.7 billion in the same period of 2013. The year-ago figure was mainly due to a one-time accounting move that allowed the company to lower its tax liability by applying losses on delinquent mortgages to its 2013 taxes.
Freddie's US$4 billion net income compared with US$4.6 billion in the first three months of 2013. Earnings were bolstered in the latest period by a decline in mortgage delinquencies, Freddie said.