And last year was Fannie’s first since its takeover by the government in 2008 that it asked for no federal aid. As recently as 2011, Fannie lost nearly $17 billion and requested nearly $26 billion in aid.
Once symbols of the reckless risk-taking that fed the housing bubble, Fannie and its smaller sibling Freddie Mac were seized by the government in 2008 after they were buried by bad mortgages. Taxpayers have spent $188 billion to rescue the two firms — the costliest bailout of the financial crisis.
Fannie still has a long way to go to repay taxpayers. It received $116 billion in aid. So far, it’s repaid $35.6 billion.
Freddie received $72 billion and has paid back nearly $24 billion. Freddie has reported positive earnings for five straight quarters.
Fannie and Freddie don’t actually make loans. But they exert huge influence in the housing market because they help make loans available. They do so by buying mortgages from lenders, packaging them as bonds, guaranteeing them against default and selling them to investors.
Together, Fannie and Freddie together own or guarantee about half of all U.S. mortgages — nearly 31 million home loans worth $5 trillion. And along with other federal agencies, they back about 90 percent of new mortgages.
The two companies nearly folded because of huge losses on risky mortgages they purchased. Fannie and Freddie bore some responsibility for those losses. Like banks, they relaxed their lending standards during the housing boom and failed to thoroughly check incomes and assets. High-interest loans, some with low “teaser” rates, were doled out to risky borrowers.
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