Bloomberg News

Fannie Mae to Pay U.S. $8.6 Billion on Third Quarter Profit (1)

November 07, 2013

Fannie Mae, the mortgage financier seized by U.S. regulators in 2008, will pay the Treasury Department $8.6 billion after reporting a seventh consecutive quarterly profit on continued recovery in the housing market.

The Washington-based company, which is operating under federal conservatorship, had net income of $8.7 billion for the three-month period that ended Sept. 30, according to a filing released today. Fannie Mae ended the quarter with a positive net worth of $11.6 billion, according the filing.

After its latest payment, the government-sponsored enterprise will have sent the Treasury a total of $113.9 billion, compared with the $117.1 billion of federal aid it has received.

“We are quickly approaching the point where taxpayers will receive a positive return on their investment in this company,” Fannie Mae (FNMA:US) Chief Executive Officer Timothy J. Mayopoulos said today on a conference call with reporters. “That’s obviously very good news for taxpayers. I’m confident in the near-term we will return more in dividend payments than we will have taken in draws.”

Fannie Mae and Freddie Mac (FMCC:US) were taken over by regulators in September 2008, shortly before the failure of Lehman Brothers Holdings Inc. and the rescue of American International Group Inc. (AIG:US), amid losses that pushed them toward collapse. The companies have returned to profitability as the housing market recovered and they raised fees for loan guarantees.

Permitted Reserve

Net income at Fannie Mae last year exceeded that of companies such as Wal-Mart Stores Inc. (WMT:US), General Electric Co. (GE:US) and Berkshire Hathaway Inc. (A:US), according to data compiled by Bloomberg. Starting this year, the terms of the U.S.-owned companies’ obligation to the government were changed so that they now return to Treasury all profits above a permitted capital reserve and the money isn’t counted as repayment.

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.

To contact the reporter on this story: Clea Benson in Washington at cbenson20@bloomberg.net

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net


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Companies Mentioned

  • FNMA
    (Federal National Mortgage Association)
    • $2.98 USD
    • -0.17
    • -5.7%
  • FMCC
    (Federal Home Loan Mortgage Corp)
    • $3.0 USD
    • -0.18
    • -6.0%
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