US mortgage giants report strong profits

Washington, Nov 8 — American mortgage providers — Freddie Mac and Fannie Mae — Thursday posted strong profits in the third quarter of the year as the housing market continued to recover.

Freddie Mac reported a pre-tax income of $6.5 billion for the third quarter, the eighth consecutive quarter of positive earnings and the second largest in the company’s history, reported Xinhua.

That was boosted by gains on securities in the company’s mortgage-related investment portfolio and gains on multifamily mortgage loans, the government sponsored enterprise said in a statement.

Fannie Mae disclosed that it earned $8.7 billion from July to September, compared with $1.8 billion in the same period a year ago. That was the company’s seventh consecutive quarterly profit, which was primarily driven by stable revenues and credit-related income as house prices continued to rise in the third quarter.

The two mortgage giants asked for $187.4 billion in aid from the US government and were put under conservatorship after suffering heavy losses from the collapse of the subprime mortgage market in 2008.

Now the two companies have benefited a lot from an improving US housing recovery that began in early 2012, and in that year both companies posted their first annual profits since 2006.

After reporting strong earnings in the third quarter of 2013, the mortgage giants will pay the US government $39 billion next month, boosting their total returns to $185.2 billion, close to pay off their taxpayers’ aid.

The two companies own or guarantee about half of all mortgages in the US, or nearly 31 million home loans. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past few years.


Source: IANS

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