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Fannie Mae to pay back $10.2B to Treasury

Aug. 8, 2013 at 2:32 PM   |   Comments

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WASHINGTON, Aug. 8 (UPI) -- Fannie Mae said Thursday it turned a $10.1 billion profit and would pay that plus $100 million to the U.S. Treasury, shrinking its housing crisis bailout debt.

The second-quarter profit was nearly twice the $5.1 billion the government-controlled mortgage-finance giant reported in the same period last year, and was the sixth straight quarter the 75-year-old institution reported a profit.

"We've obviously made very good progress," Chief Executive Officer Timothy Mayopoulos said in a conference call, explaining the eye-popping results stemmed from "a significant and rapid increase in home prices."

Fannie -- officially the Federal National Mortgage Association -- borrowed $116 billion from the Treasury in 2008, saddling U.S. taxpayers with losses it suffered when the housing market crashed during the subprime mortgage crisis.

The crisis led to a broader financial crisis and the recession.

Fannie, which guarantees home loans for millions of middle-class families, said it would make a $10.2 billion dividend payment to the U.S. Treasury next month. It paid nearly $60 billion to the Treasury last quarter.

With the new payment, it will have paid $105 billion in dividends to the government, with more than two-thirds of the money paid back this year.

At the current rate, Fannie will have paid more in dividends than it borrowed by early next year if not sooner, The Wall Street Journal said.

Freddie Mac, created by the government in 1970 to compete with Fannie, said Wednesday it turned a $5 billion profit in the second quarter and would send $4.4 billion to the Treasury next month. It has paid back $41 billion of the $71 billion bailout it received.

President Barack Obama said Wednesday he wanted to replace Fannie and Freddie with a private-sector system so government guarantees would be only a limited backstop to preserve access to the long-term, fixed-rate loans that underpin the U.S. housing market.

The government currently backs about 90 percent of the market.

© 2013 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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