WASHINGTON — Government-controlled mortgage companies Fannie Mae and Freddie Mac posted profits for the July-September period as the U.S. housing market continued to recover. Gains in recent years have enabled them to fully repay their government aid after being rescued during the financial crisis in 2008.
Fannie Mae reported Thursday that it earned $3.9 billion in the third quarter. Washington-based Fannie will pay a dividend of $4 billion to the U.S. Treasury next month. With its previous payments totaling $134.5 billion, Fannie has more than fully repaid the $116 billion it received from taxpayers.
Freddie Mac posted net income of $2.1 billion for the latest quarter. Freddie, based in McLean, Va., will pay a $2.8 billion dividend to the government. Freddie will have paid $91 billion in dividends, exceeding its government bailout of $71.3 billion.
Freddie had fully repaid as of last year’s third quarter, and Fannie as of the fourth quarter of 2013.
The government bailed out Fannie and Freddie at the height of the crisis in September 2008 when both veered toward collapse after piling up losses on risky mortgages in the housing market bust. Together the companies received taxpayer aid totaling $187.3 billion.
The gradual recovery of the housing market has made Fannie and Freddie profitable again. Their repayments of the government loans helped make last year’s federal budget deficit the smallest in five years.
The market’s revival beginning in 2012 has been fitful, and housing has lagged behind the rest of the economy. The market remains hampered by tight mortgage credit, rising home prices and stagnating incomes.
Together Fannie and Freddie own or guarantee about half of all U.S. mortgages, worth about $5 trillion. Along with other federal agencies, they back roughly 90 percent of new home loans.
The two companies don’t directly make loans to borrowers. They buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. That helps make loans available.
The latest reports of profitable quarters for Fannie and Freddie came two days after midterm elections that throw control of the Senate to Republicans. The transfer of majority power in the Senate could affect work on legislation to phase out the two companies, and instead use mainly private insurers to backstop home loans.
Two key senators reached agreement in March on a bipartisan proposal that was endorsed by the Obama White House, but it has stalled in Congress.
