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Who gets Fannie Mae’s profit?

By Judy Martel · Bankrate.com
Monday, May 14, 2012
Posted: 5 pm ET

Reflecting a decline in delinquent mortgages, Fannie Mae's profits soared in the first quarter, to $2.7 billion. As part of the bailout by taxpayers beginning in 2008, it will give it all back to the government, plus a little extra, according to the Wall Street Journal.

Since fourth-quarter 2008, Fannie Mae has received $116 billion in assistance from the government. With this latest payment of $2.8 billion, the mortgage company will have repaid approximately $23 billion so far.

Freddie Mac, the other government-owned mortgage company, made a profit of $577 million in the first quarter. Together, Fannie Mae and Freddie Mac guarantee approximately three-quarters of new home loans.

Some analysts are using news of the profitable quarter to celebrate yet another sign that the housing market is on the mend. But the Journal reports that arguments are resurfacing among Washington lawmakers about whether Fannie Mae and Freddie Mac should further help the market rebound by reducing either mortgage rates or principal amounts for homeowners who owe more money than their homes are worth.

Both mortgage companies have resisted such measures, preferring to allow the market to improve on its own, while noting that any assistance to homeowners is coming at the expense of taxpayers because the companies are in debt to the government.

Do you think the government should leave well enough alone, or require Fannie Mae and Freddie Mac to assist troubled homeowners by reducing mortgage principal or rates?

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2 Comments
Crow Hunter
May 15, 2012 at 1:30 pm

They need to stop fooling with things.

The government is one of the big reasons for the instability in the economy today. Their repeated interference and threats of "regulation" and "bailouts" to the economy have companies holding back on hiring and affluent citizens holding back on spending, waiting to see what the "next big thing" is going to be, and how it will affect their bottom lines.

Everyone is waiting for the ripples to die down before getting back into the pool. The problem is, the government keeps sticking their hands in it, making waves.

The government needs to stay out of the pool and go back to being the lifeguard before everyone decides to go swimming somewhere else.