By: Matt Rego
Fannie Mae still brings many feelings up for Americans after the mortgage broker, along with Freddie Mac, were rescued and bailed out during the 2008 crisis. The two companies received $187 billion in tax payer money, Fannie Mae specifically got $116.1 billion, in what effectively became a nationalization of the two firms. However, there is a happy ending to the crisis-era bailout for these two firms. As of a year ago, Fannie Mae and Freddie Mac have returned the entire bailout loan to the US Treasury and then some. However, just because the loans are paid back, doesn’t mean they are done paying yet. After Fannie Mae announced its fourth quarter earnings today, the company said it would be paying $1.9 billion to the US Treasury in March, as both companies are still required to pay out money to the government in the form of dividends. After the payment is made in March, the total amount paid back to government comes to $136.4 billion.
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Fannie Mae – 2014 net income and comprehensive income slips from 2013
Fannie Mae reported full year 2014 net income of $14.2 billion and comprehensive income of $14.7 billion. Additionally, Fannie Mae reported fourth quarter results of net income of $1.3 billion and comprehensive income of $1.3 billion. Full year results for 2013 came in at net income of $84 billion and comprehensive income of $84.8 billion.
As you can see, Fannie Mae was still profitable in 2014, but was down huge from 2013. The company blames its lower 2014 results on higher federal tax rates and losses on derivatives that pertained to risk management, which was due to the continued falling of long term interest rates. Tax wise, Fannie Mae paid over $6.9 billion in 2014 taxes, which put its tax rate at 32.8%, according to the company.
Fannie Mae – Providing liquidity in the markets and helping homeowners keep their homes
Fannie Mae is certainly trying to turn a corner and recover its reputation that it got during the crisis. During the fourth quarter, Fannie Mae provided $128 billion in liquidity to the mortgage markets and $434 billion for total 2014. Serious delinquent single family rates have declined from 4.48% in the fourth quarter 2010 to a rate of 1.89% in fourth quarter 2014. Additionally, Fannie Mae helped families and individuals avoid foreclosure by providing 165,000 loan workout solutions for full year 2014 and 34,000 loan workout solutions during the fourth quarter 2014.
Overall, Fannie Mae appears to turn a corner in reputation, although it will be a long time before Americans fully forgive them for their role in the 2008 crisis. However, taxpayers are now making net gains on 2008 bailouts, and that certainly helps smoothing things over for now.