Kill Fannie and Freddie? Maybe not so fast

Julie C. Nichols General

Chicago Daily Herald – Ken Harney

You may have seen two sets of news reports recently that didn’t quite add up: First, President Obama called for the liquidation of Fannie Mae and Freddie Mac, the country’s largest providers of funds for home mortgages. Then a couple of days later, Fannie Mae announced its sixth straight quarterly profit and said it was sending $10.2 billion in dividends to the Treasury. Freddie Mac also reported a hefty profit — $5 billion over the previous three months — and said it is providing $4.4 billion in dividends to the government. Both companies also summarized what they’ve been doing for homebuyers and owners following their takeover by the federal government in September 2008.

Given the president’s call for them to disappear, it’s worth taking a quick look. Since January 2009, Fannie says it has provided funding for 3.1 million home purchases and 11.4 million refinances of existing home loans. It has also helped 1.3 million borrowers who were behind on their payments and heading for foreclosure with loan modifications, workouts and other forms of assistance. It has already paid back $95 billion of the $116 billion in taxpayer funds the government loaned it, and could pay the rest sometime next year. It expects to be profitable for the "foreseeable future" as the result of the high credit quality of the new loans it’s making and because of declining losses on its existing mortgages.

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