Posted on Wednesday, March 16, 2011
NEW YORK -- Fannie Mae and Freddie Mac, the troubled mortgage giants taken over by the federal government, reported improved earnings last quarter as losses abated and soured mortgages continued to decline. But the firms, still 79 percent owned by the U.S. government, say they will need another $3.1 billion, largely to cover payments to taxpayers.
Fannie Mae reported $73 million in income for the last three months of the year, its first quarterly profit off operations since 2007, financial disclosures show. That income was erased by a $2.2 billion payment to the U.S. Treasury. The firm's regulator requested $2.6 billion from taxpayers, which would be used to repay taxpayers for their ongoing investment and fund the company with cash for the coming months.
Freddie Mac reported a $113 million loss in the fourth quarter, a significant improvement from the three-month period ending in September in which the mortgage-finance firm reported a $2.5 billion loss. Its regulator, which it shares with Fannie Mae, requested $500 million from the Treasury to help pay the $1.6 billion it owes taxpayers for their investment in the firm.
So, in effect, Fannie and Freddie are asking for money to pay down debt owed to the same parties from which they're requesting those funds.
For the year, Fannie recorded a $14 billion loss, down from its $72 billion loss in 2009. Freddie also reported a $14 billion loss last year, compared to a $22 billion loss the year before.
The mortgage giants have drawn down nearly $156 billion from the Treasury, with about $20 billion of that going back to taxpayers to pay the dividends on the shares owned by the federal government.
The firms, which own or guarantee more than half of all U.S. residential mortgages, could end up requesting as much as $363 billion through 2013, according to an October report by their regulator, the Federal Housing Finance Agency. Excluding dividend payments to the Treasury, they could cost taxpayers as much as $259 billion, the report noted.
The firms forecast lower home prices this year, according to their annual filings with the Securities and Exchange Commission, in line with most analysts' expectations that the housing market will continue to limp along.
Fannie forecasts a slight decline in home prices before they stabilize later this year, with values falling as much as 5.5 percent based on their own internal price index. Freddie Mac is less specific, simply projecting that home prices on a national basis will be lower this year than in 2010.
Separately, Freddie Mac disclosed that one of its top executives, Donald J. Bisenius, received a notice from the SEC that it intends to file civil charges against Bisenius. The Feb. 10 notice, disclosed in the firm's annual report, said the law enforcement agency's staff is preparing to recommend charges based on alleged violations of federal securities laws that occurred in 2007 and 2008.
Bisenius is at least the second top current or former Freddie official to have received such a notification from the SEC. The firm's former chief financial officer, Anthony "Buddy" Piszel, stepped down from his current employer, CoreLogic Inc., upon the firms disclosing that Piszel received the notice. The SEC has been investigating Freddie Mac for some time, securities filings show.
Shahien Nasiripou, THE HUFFINGTON POST.