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Fannie Mae

Fannie Mae-Buster Brown

US R&B Chart #1 Hit in 1960, this song belongs to Buster Brown.

Fannie Mae posts $3.2B profit in 2Q; to pay $3.1B dividend

Fannie Mae reported net income of $3.2 billion from April through June, up from a year earlier as the mortgage giant marked gains on its investments.

The government-controlled company released its second-quarter results Thursday. Washington-based Fannie Mae will pay a dividend of $3.1 billion to the U.S. Treasury next month if the company's federal regulator agrees. That payment would bring the total dividends paid by Fannie to $165.8 billion.

Fannie received $116 billion from taxpayers when the financial crisis struck in September 2008. The government rescued Fannie and smaller sibling Freddie Mac after they suffered huge losses from risky mortgages in the housing market bust. Together the companies received rescue loans totaling about $187 billion. The housing market's gradual recovery has made Fannie and Freddie profitable again.

Fannie's second-quarter profit marked an increase from the $2.95 billion it earned in the same period of 2016.

Why The US Doesn't Need Fannie Mae And Freddie Mac

Shareholders arguing for the preservation of Federal National Mortgage Association (OTC: FNMA ) and Federal Home Loan Mortgage Corp (OTC: FMCC ) say the U.S. housing market needs Fannie Mae and Freddie Mac’s services and their roles as government-backed aggregators.

However, in a recent story for American Banker , Whalen Global Advisors chairman Christopher Whalen says it’s not Fannie and Freddie that are important to the U.S. homebuyer — it’s the government’s guarantees.

GSE Roles

Fannie Mae and Freddie Mac are not mortgage originators, but rather mortgage aggregators. These government-sponsored enterprises buy mortgages from originators, such as banks, and free up liquidity on bank balance sheets that can be used to make more loans. In addition, they guarantee these mortgage loans and repackage them to sell to investors on the secondary mortgage market.

Whalen says there are several key aspects of this process that are crucial to preserve when it comes to making sure middle-income Americans have access to affordable housing. Fannie and Freddie are not among those critical aspects.

Fannie Mae?

What is the difference between Fannie Mae and Freddie Mac in terms of their purposes and in terms of the assets they hold? Are these two essentially identical?

The main difference is how they came about. Freddie Mac is the result of the S&L bailout during the 80s. Fannie Mae's inception dates back to the time of the New Deal. They both, I believe, operate in a similar fashion.