Fannie Mae to Pay U.S. $2.9 Billion on Fourth-Quarter Profit

  • Full-year net income fell to $11 billion from $14.2 billion
  • CEO reiterates Watt's warning over future of housing finance

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 Dec. 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.

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.

Watt Comments

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.

Watt on Thursday urged Congress to move on revamping the U.S. housing finance system and warned of the risk of a lack of capital at the firms. He said lawmakers should "engage in the work of thoughtful housing finance reform before we reach a crisis of investor confidence or a crisis of any other kind."

Fannie Mae and Freddie Mac buy mortgages from lenders and package them into securities, on which they guarantee to investors principal and interest payments.

Watt’s comments underscore the Obama administration’s longstanding position that the best long-term solution is comprehensive housing finance reform, Treasury Department spokesman Rob Runyan said in an e-mailed statement. Until then, Fannie Mae and Freddie Mac "will continue to rely on the $258 billion of taxpayer-provided support to sustain market confidence,” he said.

The companies received a $187.5 billion taxpayer bailout, though they have paid back more in dividends. The Treasury has committed to providing another $258 billion if needed.

Freddie Mac said on Thursday it will pay the Treasury $1.7 billion at the end of March after reporting net income of $2.2 billion for the fourth quarter. Freddie Mac will have returned $98.2 billion including the March payment, according to a regulatory filing. The company’s net income for 2015 was $6.4 billion and it paid a total of $5.5 billion to the Treasury in dividends.

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