Tuesday, August 12, 2014

Fannie Mae (FNMA.OB) and Freddie Mac to pay dividends

Freddie Mac
Freddie Mac (Photo credit: Wikipedia)
Government-controlled mortgage finance firms Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) said on Thursday they will pay U.S. taxpayers a combined $5.6 billion in dividends after another profitable quarter.
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 the U.S. government in 2008 as they teetered on the brink of insolvency.
Under their bailout terms, the firms turn their profits over to the Treasury 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. Freddie Mac, the No. 2 mortgage provider, will pay the Treasury $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. Freddie Mac 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.
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