Fannie Mae to send $59.4 billion to U.S. Treasury

By Margaret Chadbourn

WASHINGTON (Reuters) - Fannie Mae , the nation's biggest mortgage finance company, on Thursday said it will pay $59.4 billion in dividends to the U.S. Treasury after a record profit in the first quarter that reflected a multibillion dollar tax-related gain.

The government-controlled company reported pretax income of $8.1 billion for the quarter and booked an additional gain of $50.6 billion by reversing a write-down on certain tax assets, resulting in net income of $58.7 billion. That compared to a $2.7 billion profit in the same three months a year earlier.

Both its pretax income and net income were records.

The massive payment to the Treasury will reduce the net cost of Fannie Mae's taxpayer bailout to $21.1 billion.

It has received $116.1 billion in taxpayer funds since it and sibling Freddie Mac were seized by regulators in September 2008. By the end of June, it will have paid $95 billion in dividends to the Treasury for the government's stake.

Fannie Mae has now turned a profit for five straight quarters. Given its return to profitability, it had to consider when to start counting potential tax credits as part of its net worth.

"We weigh a complex set of factors in this evaluation," Fannie Mae Chief Executive Office Timothy Mayopoulos told reporters on a conference call. "We determined that the factors in favor of releasing the valuation allowance outweighed the factors in favor of maintaining it."

Freddie Mac has also return to profitability and is now weighing whether or not to realize $30.1 billion in deferred tax assets. It has received about $71 billion in taxpayer aid and will have paid $36.6 billion by the end of June, leaving the net cost of its bailout at $34.7 billion.

The terms of the bailout for the two government-controlled companies do not allow them to buy back the government's stake, which means Fannie Mae and Freddie Mac will continue making payments without being able to recover the loan amount.

The two companies buy home loans and package them into securities, ensuring that investors receive payments even when borrowers default. Both the Obama administration and Congress want to eventually wind the so-called government sponsored enterprises down.

"Unfortunately, these profits hurt GSE reform because they given the illusion mortgage finance is a great business," said Jim Vogel, head of interest rate strategy at FTN Financial in Memphis, Tennessee.

Fannie Mae and Freddie Mac own or guarantee about half of all U.S. home loans.

(Reporting by Margaret Chadbourn; Editing by Jeffrey Benkoe and Tim Ahmann and Theodore d'Afflisio)

Source: http://news.yahoo.com/fannie-mae-send-59-4-billion-cash-totreasury-114209839.html

roses april fools Good April Fools Jokes Dumpster Diaper the beach Fear