Freddie Mac posts $8.6B profit in 4Q

Published on NewsOK Modified: February 27, 2014 at 11:23 am •  Published: February 27, 2014
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WASHINGTON (AP) — Mortgage giant Freddie Mac posted net income of $8.6 billion for the October through December period, its ninth straight profitable quarter. Earnings were boosted by the continued rise in home prices, which reduced the amounts the company had to set aside to cover losses on mortgages.

Freddie's fourth-quarter profit reported Thursday nearly doubled from $4.5 billion in the last three months of 2012.

McLean, Va.-based Freddie said it will pay a dividend of $10.4 billion to the U.S. Treasury next month. Freddie already had repaid its full government bailout of $71.3 billion after paying its third-quarter dividend.

The government rescued Freddie and larger sibling Fannie Mae at the height of the financial crisis in September 2008. Together the companies received taxpayer aid totaling $187 billion.

Freddie said its full-year profit of $48.7 billion for 2013 benefited from the increase in home prices as well as the company having capitalized on the tax benefits of the sour loans it absorbed during the crisis. By applying the tax credits it had saved from its losses on delinquent loans in the third quarter, Freddie reduced what it owed the government and boosted its bottom line by $23.3 billion for 2013.

The 2013 earnings rose sharply from $11 billion in 2012.

However, Freddie said Thursday that its recent strong level of earnings "is not sustainable over the long term" because the rise in home prices has begun to slow and the use of its tax benefits was an unusual event. Freddie also gained billions of dollars last year from a number of settlements with major banks over soured mortgage securities it bought from them before the crisis.

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