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Fannie Mae posts $2.9 billion profit

Fannie Mae turned a strong profit in the second quarter, reporting earnings that will result in a $2.9 billion dividend payment to the U.S. Treasury.

Following Freddie Mac’s strong earnings report earlier this week, Fannie’s solid second quarter performance makes it all the more likely that the issue of reforming the government-sponsored enterprises (GSEs) will continue to fly under the radar as the presidential race heats up this summer.  

Fannie MaeFannie’s comprehensive and net income totaled $2.9 billion, up from $1.1 billion in net income and $936 million in comprehensive income in the first quarter.

 As with Freddie, Fannie Mae reported that its earnings were less affected this quarter by accounting losses associated with how GSEs hedge against interest-rate risk. The improved housing market also boosted revenues in several ways. 

“We had another quarter of solid financial performance,” said Timothy Mayopoulos, Fannie's chief executive officer. 

Fannie said it provided roughly $145 billion in liquidity to the mortgage market during the quarter, and also transferred a significant percentage of the credit risk to private companies on single-family loans with a balance of $660 billion.

During the financial crisis, the GSEs were placed in conservatorship and bailed out. By agreement with the government, all of their profits are swept up. After this dividend payment, Fannie Mae will have paid $148.5 billion to Treasury, and taken total draws of $116.1 billion.

Fannie and Freddie have also been required to wind down their investment portfolios, and their capital buffers are scheduled to go to zero at the beginning of 2018.

Earlier this week, Freddie Mac reported $1 billion in net income and $1.1 billion in comprehensive income in the quarter that will result in a $933 million payment to the Treasury. Freddie’s second-quarter earnings were up from a $354 million net loss and $200 million comprehensive loss in the first quarter of the year, which were largely accounting losses linked to its hedging activities. 


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