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Fannie Mae payments will exceed U.S. bailout funds
WASHINGTON (2/24/14)--Fannie Mae will soon fully reimburse the federal government for the $116.1 billion bailout it received after the worldwide financial crisis in 2008.
Its net income in the fourth quarter last year reached $6.5 billion, pushing its total 2013 profit total to $84 billion, the publicly operated mortgage finance company said Friday in regulatory filings. The gains mean that Fannie will soon give the Treasury Department $7.2 billion, bringing its total bailout reimbursement to $121.1 billion--a sum that includes $1 billion in preferred stock obtained by Treasury in 2008 (Bloomberg Feb. 21).
After the payment, Fannie and its sister firm Freddie Mac, will have returned around $192.5 billion in dividends to the Treasury, exceeding the $187.5 billion rescue package the two firms received in 2008 (The Wall Street Journal Feb. 21). The pair paid $130 billion to the Treasury Department last year, the first that required them to pass on the majority of their net income to taxpayers.
Rising home prices boosted Fannie's bottom line, according to The Wall Street Journal. As a result, executives warned that a cooling housing market should slow the firm's revenue stream in 2014. Its inventory of foreclosed properties was up at the end of last year for the second straight quarter, in spite of eight straight profitable quarters, and institutional investors have been curbing demand in recent months. Fannie's fourth quarter profit was lower on a year-over-year basis, by $1.1 billion.
However, barring a sharp economic downturn or the downfall of the two government-sponsored housing enterprises, Fannie and Freddie likely will continue to pay billions back to the Treasury, albeit not at 2013's pace (News Now Feb. 12).
Fannie CEO Timothy Mayopoulos told reporters, according to Bloomberg, that the firm's profitability should not justify further delays for housing-finance reform. Mayopulos also said Friday that the new FHFA director Melvin Watt, a former Democrat congressman appointed in January, has not yet announced his priorities for the firm. Senators are currently working on legislation to reform Fannie and Freddie, according to The Wall Street Journal. The White House has warned that the chance of it passing is growing slimmer with time, as November's midterm elections approach.


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