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Fannie Mae reported positive net earnings for Q3, returning money to the US Treasury; however, fair value losses eroded much of its profit—the same issue that caused Freddie Mac to report a Q3 loss.
Fannie Mae posted a net income of $1.96B for the quarter, down from $3.91B a year earlier. Yet the GSE experienced a $2.59B loss due to a drop in long-term interest rates that changed the value of derivatives.
While Fannie Mae will pay $2.2B in dividends to the Treasury, Freddie Mac’s $475M loss prompted Federal Housing Finance Agency Director Melvin Watt to announce that a capital infusion from the US Treasury may be necessary. [GS]
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