Fannie, Freddie send $5.6 billion in profits to Treasury

Mortgage giants Fannie Mae and Freddie Mac plan to pay the Treasury Department another $5.6 billion in profits as the housing market comeback boosts their books.

Congress remains a long way from overhauling the two bailed-out government-sponsored enterprises (GSE), but the two continue to pay out billions of dollars each quarter to the Treasury Department as part of their rescue agreement.

{mosads}Fannie reported $3.7 billion in net income for the second quarter of the year, spanning from April to June. And Freddie logged $1.4 billion in net income. Under the terms of their rescue agreement with the Treasury, the two must hand over all profits minus operating costs.

Both parties and the White House agreed that the current housing market, which sees Fannie and Freddie guarantee the vast majority of the nation’s mortgages while on a government lifeline, is unsustainable. But neither party has been able to make significant headway in advancing preferred housing finance reform legislation, and there are minimal expectations anything else will happen on that front in the current Congress.

But in the meantime, the comeback in the housing market buoyed by low interest rates means Fannie and Freddie, which once required $188 billion in government funds to stay afloat, will be passing along profits to the government.

In June, the Congressional Budget Office reported the two GSEs had paid the Treasury $42 billion so far in the fiscal year, providing one of the biggest budget boosts for the government.

While the dividend payments to the Treasury do not pay back bailout funds explicitly, both GSEs have now paid more to the government in profits than they took out during the housing crisis. The latest dividend announcement means Fannie will have paid the Treasury $130.5 billion, compared to $116.1 billion in rescue funds requested. And Freddie has paid $88.2 billion compared to $72.3 billion taken out.