Freddie Mac to Send U.S. Treasury $1.7 Billion After Profit

  • Mortgage firm had net income of $2.2 billion in fourth quarter
  • CEO Layton says results boosted by growth in purchase volumes

Freddie Mac, the U.S.-controlled mortgage firm, will pay the Treasury Department $1.7 billion at the end of March after reporting net income of $2.2 billion for the fourth quarter.

The company, which was seized along with larger Fannie Mae during the 2008 financial crisis, will have returned $98.2 billion including the March payment, according to a regulatory filing Thursday.

The McLean, Virginia-based company had a loss of $475 million during the third quarter. That was its first quarterly loss since 2011 stemming mostly from accounting for hedges against interest-rate risk. Freddie Mac didn’t have a dividend obligation during the fourth quarter since it reported a comprehensive loss for the third quarter, said Lisa Gagnon, a spokeswoman for the mortgage firm.

"2015 marked another year of solid financial performance," Donald Layton, Freddie Mac’s chief executive officer, said in a statement. “Although we did experience significant quarterly market-related earnings volatility.”

Freddie Mac’s net income for 2015 was $6.4 billion and it paid a total of $5.5 billion to Treasury in dividends, the filing said.

Layton said during a phone interview Thursday that the housing market is "looking relatively good," but that uncertainty will be a key feature of the market in 2016.

Under the government conservatorship, the two mortgage-finance firms 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.

During a speech Thursday at the Bipartisan Policy Center in Washington, the overseer of Freddie Mac and Fannie Mae called on Congress to start revamping the U.S. housing finance system and warned of the risks if it doesn’t.

Mel Watt, director of the Federal Housing Finance Agency, urged lawmakers to "engage in the work of thoughtful housing finance reform before we reach a crisis of investor confidence or a crisis of any other kind."

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