Fannie Mae has posted Q4 of 2013 net income of $6.5 billion. This marks its eighth profitable quarter in a row. One Fannie Mae has repaid it’s Q4 dividend, it will have repaid it’s massive government bailout in full.
The 2013 annual profit for Fannie Mae was $84 billion. This figure was stimulated by rising home prices, tax benefits that the company had accumulated from mortgage losses during the financial crisis, and the settlements it had received from major banks who sold bad mortgages to the company prior to the financial crisis, and a decline in mortgage delinquency rates. All of these factors are unlikely to happen once again, potentially making 2013 an exceptionally profitable year for the company.
Both Fannie Mae and Freddie Mac have repaid the government to make 2013’s federal budget deficit the lowest over the past 5 years. Fannie Mae and Freddie Mac own or guarantee roughly 50% of all U.S. mortgages, which is worth around $5 trillion. Today, about 90% of U.S. mortgages can be attributed to these companies.
President Barack Obama plans to wind down Fannie and Freddie, and replace them with a system that allows the private sector to be more competitive with these companies. The goal is to have the private sector ultimately at risk for the loans, and have the government control oversight and act as a last-resort guarantor. Of course, this proposal must reach a bi-partisan agreement.
CNN reports, “U.S. taxpayers have recouped all of the $187 billion that they gave mortgage giants Fannie Mae and Freddie Mac in one of the most expensive bailouts of the financial crisis.” Fannie Mae also reported this past Friday February 21st, 2013, that it will pay Treasury an additional $7 billion in profit.
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