Financial Services

A decade after housing crash, Fannie Mae and Freddie Mac are Uncle Sam's cash cows


US Treasury Secretary Henry Paulson addresses a press briefing October 10, 2008 at the US Treasury Department in Washington, DC. 

Tim Sloan | AFP | Getty Images

US Treasury Secretary Henry Paulson addresses a press briefing October 10, 2008 at the US Treasury Department in Washington, DC. 

The bailout gave Fannie and Freddie the financial liquidity they needed to survive, but also required them to pay the Treasury a 10 percent dividend as part of the deal.

In 2012, when the two were profitable again, Treasury and FHFA revised the agreement, with the former getting all profits on a quarterly basis. In 2017, Treasury and FHFA agreed to allow Fannie and Freddie to maintain $3 billion in capital, before having to pay the remainder of their profits to Treasury.

As a result of the bailout, Fannie and Freddie continued to back loans and now, along with FHA, they back the vast majority of new home loans. Investors continued to buy the mortgage backed securities from Fannie and Freddie, because they were backed by the government, and the housing market began to recover.

“If anyone had said that they saw this back in 2008 or 2009, I think they’re kidding themselves,” Seiberg said.

Home prices nationally fell 27 percent from their peak in 2006, the height of the housing boom and its reckless lending environment, to their trough in 2012. Prices are currently nearly 11 percent higher than their 2006 peak, according to the S&P CoreLogic Case-Shiller Index.

In some markets, however, the roller coaster was and is far more dramatic. In Las Vegas and Phoenix, heavy investor markets during the boom, homes lost more than half their peak value and have still not fully recovered.



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