This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Fannie Mae To Pay Treasury $8.6 Billion In Dividends

NEW YORK (TheStreet) -- Fannie Mae (FNMA) said it will pay the Treasury $8.6 billion in dividends after posting a profit for the seventh consecutive quarter.

The bailed-out housing giant said net income jumped to $8.7 billion from $1.8 billion a year earlier on the back of stable revenues and continuing improvement in credit quality that prompted further releases of loan loss reserves. The quarter also benefited from a compensatory fee agreement from Bank of America (BAC).

Fannie said it expects "to remain profitable in the foreseeable future" though earnings may vary significantly quarter to quarter due to various factors such as changes in interest rates or home prices.

Fannie Mae finished the quarter with a net worth of $11.6 billion. Under the terms of its amended bailout agreement with the U.S. Treasury, the company is required every quarter to make a dividend payment to the government of all of its earnings, less a minimal capital cushion of $3 billion. The payouts do not constitute a repayment of the government bailout money. The Treasury continues to hold $117.1 billion in senior preferred Fannie Mae shares.

As of Sept.30,2013, the company has paid the government $105.3 billion in dividends. After the December payment, it will have paid $114 billion in dividends to the Treasury.

Shares of Fannie Mae were up 4.3% in pre-market trading, to $2.40..

Fannie Mae and Freddie Mac (FMCC) were taken into government conservatorship at the height of the credit crisis in September 2008.

In the wake of the crisis, as the private market for mortgage securitizations faded, the agencies stepped in to fill the void. As a result, Fannie and Freddie, along with the Federal Housing Administration, guarantee more than 80% of freshly originated mortgages.

The quality of the loans originated since 2009, which now account for 75% of the company's single-family mortgage book, is considered pristine and Fannie Mae says it expects the loans to be profitable over their lifetime.

Still, most policymakers are keen on winding down the agencies and are calling for a greater role of private capital in the market. However, there is disagreement on whether the government should continue to maintain some presence in the market in the form of a limited guarantee.

Some investors and market participants are calling for the agencies to be rehabilitated and returned to their private forms, though political analysts say there is little appetite in Washington to keep Fannie and Freddie alive.

-- Written by Shanthi Bharatwaj in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,915.07 -70.54 -0.42%
S&P 500 1,964.68 -8.15 -0.41%
NASDAQ 4,396.2040 -22.83 -0.52%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs