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Fannie Mae reports first profit in a long timeFannie Mae has reported its very first profits in years, bringing in $2.7 billion. The company has been managed and financed by the government since 2008. How many times have you expected more info on ways to get a quick cash advance, and resorted to a web search on
Cash flowing in
One of the effects of the housing crash of the past couple of years was that two of the central financial institutions in the American housing industry, Fannie Mae and Freddie Mac, lost hundreds of billions of dollars. Roughly half of all mortgages in the U.S., according to USA Today, are owned or guaranteed by Freddie or Fannie, comprising about 31 million homes and $5 trillion worth in value.
In Sept 2008, the Federal Housing Finance Bureau had to assume control of the two home loan backing agencies. Fannie and Freddie received massive amounts of federal funding in order to stay afloat, and the agencies have received about $170 billion to date in loans from taxpayers.
Fannie has turned around and posted a profit for the first time in four years, after receiving about $117.1 billion in funding, according to Reuters.
Does not want any more help
About $22.6 billion of the loans Fannie has received since 2008 have been repaid by the business. It is doing much better now with a first-quarter profit of $2.7 billion, after a $2.8 billion repayment to the government. Compared with 2011ís first quarter loss of $6.5 billion, the company is doing very well.
From the first quarter of 2011 to the last quarter, there was a decrease in delinquency rates for mortgages at Fannie Mae from 5.47 percent to 3.67 percent, which is also good news.
The company has also, according to the New York Times, refused any further federal resources. Freddie Mac, however, did have to take a further $19 million in taxpayer funds in order to make a $1.8 billion payment to working class individuals, though after posting a profit of $577 million, according to Reuters.
Losses do not stop them from getting business
Regardless of government officials declaring that Freddie Mac and Fannie Mae's roles needed to be reduced in the national housing market, the two firms are still a dominant force. After a home loan is lent by a bank, Freddie or Fannie buys the loan and assumes ownership or sells it as a security to investors, keeping banks in fresh capital for lending. Freddie and Fannie still own roughly 60 percent of brand new mortgages.
USA Today explained that the government supports other agencies. About 90 percent of all mortgages are owned by agencies backed by the government.