Fannie Mae to pay US$2.9bn on Q4 profit

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Fannie Mae, the government-controlled mortgage company, will pay the U.S. Treasury Department $2.9 billion after reporting net income of $2.5 billion for the fourth quarter.
The company, which was placed under conservatorship along with smaller rival Freddie Mac during the 2008 financial crisis, will have returned $147.6 billion in dividends to the federal government, according to a regulatory filing Friday. Washington- based Fannie Mae has received $116.1 billion from the Treasury since 2008. The company reported a positive net worth of $4.1 billion as of December 31.
Under the conservatorship, the two mortgage-finance giants are required to turn over all profits above a minimum net worth threshold. The payments count as a return on the U.S. investment and not as repayment of the aid, leaving no existing mechanism for them to exit government control.

Watt Comments

Fannie Mae’s 2015 net income was $11 billion, down from $14.2 billion in 2014. One reason for the decline was higher income in 2014 following settlement agreements on lawsuits related to private-label mortgage-related securities sold to Fannie Mae.
The $2.5 billion in net income for the fourth quarter was up from $2 billion in the three months ended Sept. 30.
Chief Executive Officer Tim Mayopoulos reiterated calls by Fannie Mae’s overseer, Federal Housing Finance Agency Director Mel Watt, for U.S. policymakers to address the future of the government-sponsored mortgage companies.
Mayopoulos said in a phone interview Friday that he doesn’t think there’s currently uncertainty in financial markets over Fannie Mae, but “the question is if we ended up with short-term events that produced some of this volatility, would it at some point cause some concern in the market.” Watt is appropriately saying the future of the companies should be addressed “before that concern is out there, because once it’s out there, it may be very difficult to manage,” Mayopoulos said.

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