Freddie said it would pay a dividend of $7 billion to the Treasury Department next month and requested no additional federal aid for the fourth consecutive quarter.
The earnings from January through March compared with net income of $577 million in the first quarter of 2012.
The government rescued Freddie and its larger sibling Fannie Mae in 2008 during the financial crisis after both incurred huge losses on risky mortgages. The companies received loans totaling about $170 billion, the costliest bailout of the crisis. So far, the companies have repaid a combined $62.2 billion.
The companies are benefiting from a housing recovery that began a year ago. Record-low mortgage rates and slow but steady job growth have helped bring buyers back to the market. Home sales and construction have increased. And home prices are rising at the fastest pace in six years.
For Fannie and Freddie, a better housing market means fewer delinquent loans on their books. The improvement has also allowed the companies to charge mortgage lenders higher fees to guarantee the loans.
Under a federal policy adopted last summer, Fannie and Freddie must turn over any quarterly profits to the government.
Freddie earned $11 billion last year and paid $7.2 billion in dividends to the Treasury. It requested no government aid in the second, third and fourth quarters last year.
Fannie reported last month that it earned $17.2 billion last year and said it expected to stay profitable for “the foreseeable future.” It paid $11.6 billion in dividends to the Treasury in 2012. Last year was also Fannie’s first since its government takeover in which it asked for no federal aid.
Fannie and Freddie do not directly make loans. Rather, they buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors.
Article source: http://www.nytimes.com/2013/05/09/business/a-4-6-billion-profit-for-freddie-mac.html?partner=rss&emc=rss
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