Federal funds unneeded
One large issue the nation faced during the financial crash was the housing industry failing. Hundreds of billions of dollars were lost by Fannie Mae and Freddie Mac when everything crashed. Presently, Fannie or Freddie guarantee or own about 31 million homes and $5 trillion in value, or about half of all mortgages, according to USA Today.
The two mortgage backing agencies were no longer in control, and they were seized by the Federal Housing Finance Agency in Sept 2008. They were given $170 billion in loans from taxpayers since then, and this federal funding was used to keep them running.
Fannie received the most, about $117.1 billion in funding, according to Reuters. However, Fannie has also managed to turn its losses around and post its first profit in nearly four years.
<strong>Refuses further funding</strong>
About $22.6 billion of the loans Fannie has received since 2008 have been repaid by the company. It is doing much better now with a first-quarter profit of $2.7 billion, after a $2.8 billion repayment to the government. In contrast to 2011’s first quarter loss of $6.5 billion, the business is doing very well.
There was also a drop in delinquency rates for mortgages backed by the company. From the first quarter of 2011, it decreased from 5.47 percent to 3.67 percent during the last quarter.
The business has also, according to the New York Times, refused any further federal funds. Freddie Mac, however, did have to take a further $19 million in taxpayer funds to be able to make a $1.8 billion payment to taxpayers, though after posting a profit of $577 million, according to Reuters.
<strong>Still widely used</strong>
Regardless of government officials declaring that Freddie Mac and Fannie Mae's roles needed to be reduced in the national housing market, the two firms are still a dominant force. After a home loan is lent by a bank, Freddie or Fannie buys the loan and assumes ownership or sells it as a security to investors, keeping banks in fresh capital for lending. Fannie and Freddie still own roughly 60 percent of brand new mortgages.
Including other government-backed entities, government-backed agencies own or guarantee roughly 90 percent of all mortgages, according to USA Today.
<strong>Sources</strong>
<a href="http://www.usatoday.com/money/companies/earnings/story/2012-05-09/fannie-mae-profit/54849844/1"><strong>USA Today</strong></a>
<a href="http://www.reuters.com/article/2012/05/09/us-usa-fanniemae-idUSBRE8481DD20120509"><strong>Reuters</strong></a>
<a href="http://www.nytimes.com/2012/05/10/business/fannie-mae-profit-signals-a-stabilizing-housing-market.html?_r=1"><strong>New York Times</strong></a>