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July 23, 2014

Fannie Mae Swings to Record-Breaking Profit

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Fannie Mae Swings to Record-Breaking Profit

Fannie Mae generated a record high in profits in 2013, earning enough in profits to push its total payments to the federal government higher than the amount it received in the 2008 bailout. 

The mortgage giant earned a record high of $84 billion in profit in 2013. The fourth quarter marked its eighth consecutive profitable quarter. 

The earnings mean that Fannie Mae alone with Freddie Mac, which also received taxpayer bailout money, will have poured in $192.4 billion to the government – more than the $189.5 billion they actually received in government support. 

Fannie Mae’s profits alone were nearly five times as great as they were in 2012, which also at the time had been a record year. Rising home prices and falling default rates are helping to boost the mortgage giants' profitability. 

"The payment does not wipe out their draws on the Treasury, however, or remove them from conservatorship," The New York Times reports. "There is no mechanism for the companies to pay back their debt, but in return for the bailout the government has claimed all of their profits."

Regardless of the mortgage giants' jump to profitability, lawmakers still want to change the nation's housing finance system. 

“Today’s move is largely symbolic but it doesn’t change the underlying dynamic,” Julia Gordon, the director of housing finance and policy at the Center for American Progress, told The New York Times. “It may be a profitable company but it is not a viable company, nor is it a company that is investing in its own future.”

Source: "Fannie Mae Posts Profit that Sets a Record," The New York Times (Feb. 21, 2014)

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