Freddie Mac posts $8.6B profit in fourth quarter

Government-controlled mortgage giant Freddie Mac posted a net income of $8.6 billion for the final three months of last year.

Freddie announced on Thursday it will pay a dividend of $10.4 billion to the Treasury Department next month.

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With its third-quarter dividend payment, Freddie already had repaid the $71.3 billion it received from taxpayers to stay afloat during the financial crisis.

With the most recent payment, Treasury will have received $81.8 billion in dividends.

Nearly a week ago, Fannie Mae showed that its fourth-quarter profit helped it eclipse the $116.1 billion it needed more than five years ago.

Fannie is sending a dividend of about $7.2 billion, pushing its total to $121.1 billion.

All told, Fannie and Freddie received about $188 billion in 2008 when the government took them over.

Even though Fannie and Freddie have covered that taxpayer loan amount, technically, the profits count as a return on the Treasury's investment but not as a repayment.

Last year, Freddie made $48.7 billion on higher home prices, settlements with banks over mortgage securities gone bad and various tax benefits.

The 2013 profit is more than four times the $11 billion posted in 2012.

These settlements contributed $4.8 billion and $5.5 billion to Freddie Mac’s income in the fourth quarter and full-year 2013, respectively.

But the surge in profits might not be sustainable, because of home prices leveling out.

The company’s financial results also will "continue to be affected by changes in interest rates, the yield curve and mortgage spreads, which can cause significant earnings and net worth variability from period to period," according to a Freddie release.

Fannie and Freddie own or guarantee about $5 trillion in mortgages, about half of all loans. The government backs about 90 percent of all new mortgages.

As the companies churn out profits, Congress is working on several different housing finance proposals that would eventually unwind them over several years in an effort to rebalance the mortgage market between government and private investment.  

Overall, the goal is to shift the risk back toward the private sector.

Two senators — Sens. Bob CorkerBob CorkerA guide to the committees: Senate Republicans play clean up on Trump's foreign policy GOP Congress unnerved by Trump bumps MORE (R-Tenn.) and Mark WarnerMark WarnerTrump's pick for intel chief to get hearing next week A guide to the committees: Senate Report: Senate Intel Committee asks agencies to keep records related to Russian probe MORE (D-Va.) — have a plan that is being used as a foundation for a bill being worked on by Senate Banking Committee leaders.  

The House Financial Service Committee approved a Republican measure last summer and House Democrats, led by panel ranking member Maxine Waters (Calif.), are working on a separate proposal.