Freddie Mac will pay the Treasury Department $1.9 billion after the second-largest financier of U.S. mortgages posted its 11th consecutive quarterly profit.
McLean, Virginia-based Freddie Mac, under federal conservatorship since 2008, had net income of $1.4 billion for the three months through June, according to a regulatory filing today. That’s down from $5 billion in the year-earlier period as the end of a refinancing boom caused U.S. mortgage originations to plummet.
The company earned a record $48.7 billion in 2013, compared with just $2.3 billion in 2006, its last profitable year before the onset of the housing bust.
U.S. mortgage lending tumbled 50 percent in the second quarter from a year earlier, led by a 69 percent drop in refinancing. The average rate for a 30-year fixed mortgage was 4.2 percent in the three-month period, half a percentage point higher than a year earlier, as the Federal Reserve reduced its purchases of securities backed by home loans.
Fannie Mae and Freddie Mac were seized by regulators in September 2008 amid losses that pushed them toward collapse. The companies provide liquidity to the mortgage market by packaging loans into guaranteed securities.