Freddie Mac Earns $4.5 Billion Mortgage Profit in 4th Quarter

After several years of needing government assistance to stay afloat, mortgage giant Freddie Mac has made some headway in the last year, managing to make a major profit in the latest quarter.

Between October and December, Freddie earned $4.5 billion as a result of “a decrease in the volume of newly delinquent single family loans and continued improvement in national home prices.” The 2012 fourth quarter marks the fifth consecutive profitable quarter for the government-controlled company.

Freddie, along with Fannie Mae and the Federal Housing Administration, guarantee roughly 90 percent of all U.S. mortgages now. Both Fannie and Freddie were taken into government conservatorship in the fall of 2008 as they teetered on the brink of collapse. Both sustained massive losses from toxic mortgage loans they had backed.

Since then Fannie and Freddie have borrowed a combined total of $170 billion from taxpayers to keep moving, the largest of the financial meltdown crisis bailouts. To date, the companies have repaid a total of $52.3 billion.

During the latest quarter, when profits were way up, Freddie Mac handed over a $1.8 billion dividend to the U.S. Treasury to pay down its debt. During 2012, Freddie earned a net income of $11 billion, a major victory after a net loss of $5.3 billion in 2011.

It has now been three straight quarters since the firm had to ask the government for more aid

“In 2012, Freddie Mac significantly improved its financial performance and returned more than $7 billion to America’s taxpayers through dividends,” said Freddie Mac CEO Donald H. Layton in a press release. “It’s clear from our earnings that the housing market has turned a corner and that our work to minimize legacy losses and build a strong new book of business is paying off.”

He added,

“In 2012, we helped 2.5 million families to buy, refinance or rent a home and another 170,000 to avoid foreclosure – bringing the total to nearly 10 million since the start of the housing crisis. We continue to work with our regulator, our customers and the industry to support the housing market and build a stronger mortgage finance system for the nation.”


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