A number of hedge funds, including Paulson & Co., are pushing for privatization of Fannie Mae Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac Federal Home Loan Mortgage Corp (OTCBB:FMCC)). The news comes less than a month after Fannie Mae’s CEO said taxpayers would benefit from a bailout.

John Paulson

Congress has been planning to liquidate the two companies, and investors have been snapping up preferred stock which has been considered to be worthless for quite some time. Today Bloomberg cites sources who said Paulson & Co. and other hedge funds met with the Senate Banking Committee and staffers in the House of Representatives.

Tennessee Senator Bob Corker (Rep.) told Bloomberg, “There are funds that have taken very large positions, large hedge funds, and they are lobbying heavily. I don’t give investment advice, but I don’t see how these are going to be worth anything down the road.”

Hedge funds don’t publicly release the amount of their holdings in Freddie Mac and Fannie Mae securities. Investors in Perry Capital and Claren Road say the two funds hold preferred shares.

Both Fannie Mae and Freddie Mac have just returned to profitability as the U.S. housing market begins to recover. Currently House and Senate lawmakers are working on legislation that would wind down both federally sponsored enterprises.

At this point, Treasury has $188.5 billion in senior preferred stock in the two companies. That’s how much money they’ve had to give the companies in order to keep them afloat. Fannie Mae and Freddie Mac have given $65.2 billion back through dividends. The dividends are counted as a return on the investment made by the government rather than a repayment of borrowed money.