WASHINGTON (AP) — Mortgage giant Freddie Mac earned $4.6 billion from January through March, helped by a stronger housing market. The government-controlled company has now turned a profit in its past six quarters.
Freddie said Wednesday that it paid a dividend of $7 billion to the U.S. Treasury from its first-quarter earnings and requested no additional federal aid. The earnings compared with net income of $577 million in the first quarter of 2012.
The government rescued Freddie and larger sibling Fannie Mae during the financial crisis after both incurred massive losses on risky mortgages. Taxpayers have spent about $170 billion to them, the costliest bailout of the crisis. So far, the companies have repaid a combined $62.2 billion.
Under a federal policy adopted last summer, Fannie and Freddie must turn over their quarterly profits to the government.
The companies are benefiting from a housing recovery that began a year ago. Record-low mortgage rates and slow but steady job growth have helped bring buyers back to the market. Home sales and construction have increased. And home prices are rising at the fastest pace six years, driven by higher demand and a limited supply of homes for sale.
For Fannie and Freddie, a better housing market means fewer delinquent loans on their books. The improvement has also allowed the companies to charge mortgage lenders higher fees to guarantee the loans.
Fannie and Freddie don't actually make loans. Rather, they buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. In doing so, they help make loans available and exert influence over the housing market.
Together, Fannie and Freddie own or guarantee about half of U.S. mortgages — nearly 31 million home loans worth $5 trillion. And along with other federal agencies, they back about 90 percent of new mortgages.
Freddie, based in McLean, Va., requested no government aid in the second, third and fourth quarters last year, after asking for $19 million in the first quarter. The company received $7.6 billion for all of 2011 and $13 billion for all of 2010.
The Obama administration proposed a plan in 2011 to slowly dissolved Fannie and Freddie, with the goal of shrinking the government's role in the mortgage finance system. But Congress hasn't yet decided how far the government's role should be reduced.