Fannie Mae (FNMA.OB) and Freddie Mac to pay dividends
|Freddie Mac (Photo credit: Wikipedia)|
Once they make their latest payments in September, they will have returned $218.7 billion to taxpayers in return for the $187.5 billion in aid they received after being placed under the government's wing at the height of the financial crisis.
The two companies, which buy mortgages from lenders and repackage them into securities they sell to investors with a guarantee, were seized by in 2008 as they teetered on the brink of insolvency.
Under their bailout terms, the firms turn their profits over to the as dividends on the government's controlling stake.
Fannie Mae, the nation's largest source of mortgage funds, earned a $3.7 billion profit between April and June and will turn it over as its dividend payment. , the mortgage provider, will pay the $1.9 billion.
Shares for the two companies edged higher.
The dividends had swelled in recent quarters as the companies received funds from legal settlements and booked big profits on accounting gains from the recognition of deferred tax assets.
Fannie Mae's profits - and its dividend payment - were lower than in the first quarter largely because of a reduction in settlement payments. reported $400 million in settlements in the second quarter, which was just a sliver of what it took in the first quarter.
The regulator for the two firms had sued 18 financial institutions for allegedly misleading Fannie Mae and Freddie Mac about the soundness of mortgages that underlay securities they sold.