Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s string of strong quarterly profits could stall the drive to dismantle the Government-Sponsored Enterprises (GSEs).

Fannie Mae FHFA Federal National Mortgage Assctn Fnni Me (FNMA)

According to Margaret Chadbourn and Emily Stephenson of Reuters the dismantle move has been stalled after groups banking on the Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s survival rallied to their cause.

Mix of bills for Fannie Mae and Freddie Mac

A mix of bills has been introduced in the Senate and House of Representatives for dismantling Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC).

The trio of House Democrats – John Delaney, John Carney and Jim Himes – unveiled a new proposal that would wind down the U.S. mortgage finance giants over five years, creating a path for their eventual sale.

Last year, Sens. Bob Corker, R-Tenn., and Mark Warner, D-Va introduced a bipartisan Senate bill to replace the Federal Housing Finance Agency, the conservator of Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC), with a government agency, the Federal Mortgage Insurance Corporation.

Republicans in the House of Representatives, led by Jeb Hensarling of Texas, proposed a bill that would eliminate the two mortgage giants and limit government involvement in housing finance to the mortgage insurance provided by the FHA.

However, Margaret Chadbourn and Emily Stephenson of Reuters note that momentum evaporated due to tugs from various interest group and Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC)’s ability to report billions of dollars in quarterly profits since early 2012. Moreover, they point out that some cosponsors of the earlier bill have been hesitant to sign on to a new housing reform effort.

Fannie Mae, Freddie Mac’s contribution to the Treasury

According to a Treasury Department report, the Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) made payments to the Treasury totaling $34 billion more last month than they did a year earlier. The mortgage giants have taken $187.5 billion in U.S. aid since they were taken into conservatorship in 2008. The GSEs have returned $185.2 billion, which is counted as a return on the nearly 80% stake the government holds, not as payment.

However, Michael Stegman, the Treasury advisor warned that those recent returns from the GSEs “may significantly overstate the true financial condition” the companies, “especially on a go-forward basis”.

Nick Timiraos of The Wall Street Journal believes the reaction from the Treasury advisor might point to the view that the Obama administration doesn’t want the profits to remove the urgency for Congress to decide how to overhaul Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). Moreover, Nick Timiraos believes the profits could not only remove the urgency for any overhaul, but they could also lead lawmakers to grow more comfortable with less dramatic changes whenever they get around to proposing such an overhaul.