Fannie, Freddie flip Treasury $6.8B

November 7, 2014

WASHINGTON (11/10/14)--Fannie Mae and Freddie Mac, the government's two massive mortgage finance firms, will hand over $6.8 billion to the U.S. Treasury after reporting solid profits in the third quarter (Chicago Tribune Nov. 6).

The latest payment brings the total amount returned to taxpayers, who gave the two agencies $188 billion after the housing market crashed in 2008, to $225.5 billion.

Fannie Mae recorded a net income for the quarter of $3.9 billion, up from $3.7 billion in the second quarter, while Freddie Mac earned a net income of $2.1 billion following a $1.4 billion second quarter (Chicago Tribune).  

The increase for Fannie Mae was fueled by climbing net interest income, and by a $1.2 billion settlement check from Goldman Sachs and HSBC for their roles in the financial crisis.

Similar to Fannie, Freddie Mac also saw profits rise thanks to higher net interest income and a $1.2 billion settlement check from the two big banks.

Despite the healthy profits for the quarter, however, the housing market still appears to be dragging down the bottom lines of the two mortgage giants.

Fannie's net income is down $8.7 billion year-over-year, and last year Freddie's net income was nearly as high as $30.5 billion, but has fallen "dramatically" since then, according to the Tribune.

Further, Fannie reported for the quarter that its credit-related income, at $836 million, is the lowest it has been since the third quarter of 2012.

Fannie attributed the decline to slower rates of home-price appreciation compared with the previous quarter.