Fannie and Freddie Pay Dividends

The Editors | August 9, 11:29 am

In financial statements released this week, mortgage giants Fannie Mae and Freddie Mac announced that they will be paying a combined $14.6 billion in dividends to the Treasury Department in September, based on their second quarter performance.

Those payments will bring Fannie Mae's total dividends paid to $105 billion, and Freddie Mac's to $41 billion, since the two government sponsored enterprises (GSEs) were taken into conservatorship by the federal government in 2008. The largest single payment to date came in the second quarter of this year, when Treasury received nearly $60 billion from Fannie Mae as the result of a one-time valuation allowance for deferred tax assets.

Under the 2008 purchase agreement, which sought to increase liquidity for mortgage guarantees, Fannie and Freddie have collectively drawn more than $180 billion from Treasury in exchange for preferred stock. They have not made any new draws since returning to profitability last year.

There is some momentum in Congress and the White House for winding down Fannie and Freddie as part of a larger overhaul of the government's role in the housing market, but arriving at a deal may be difficult as long as the GSEs are providing billions in dividends each quarter. The additional revenue could have the added effect of pushing back Congress' deadline for raising the federal debt ceiling.

Read more on Fannie Mae's Rising Profits Could Delay Debt Ceiling Debate

About the Data

Fannie Mae and Freddie Mac released their second quarter financial reports earlier this week.