Freddie Mac Posts Record-Breaking Profit
Freddie Mac Posts Record-Breaking Profit
Mortgage giant Freddie Mac reported an $11 billion annual profit for 2012—its largest ever gain. This also marks Freddie Mac’s first profitable year since 2006. Just one year ago, Freddie reported a loss of $5.3 billion.
As home prices stabilize across the country and mortgage delinquencies fall, Freddie—along with fellow mortgage giant Fannie Mae—is seeing a turn of fortune following years of taxpayer bailouts.
"It's clear from our earnings that the housing market has turned a corner and that our work to minimize legacy losses and build a strong new book of business is paying off," says Donald Layton, Freddie's chief executive officer.
Between 2008 and 2011, Freddie lost more than $90 billion—which coincided with falling home prices and a surge in home owners defaulting on their mortgages.
Freddie will have to pay a hefty part of that profit back to the U.S. Treasury. For example, in March, it’ll make a $5.8 billion dividend payment to the U.S. Treasury.
To date, Freddie has received about $71.3 billion from the Treasury in aid. Starting this year, the Treasury will take all of Freddie’s—as well as Fannie’s—profits, so that taxpayers get paid back their money more quickly.
Source: “Freddie Mac Posts Its Largest Profit Ever Last Quarter,” The Wall Street Journal (Feb. 28, 2013)
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