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Fannie Mae and Freddie Mac would likely need another sizable draw from the U.S. Department of Treasury should an economic downturn occur, according to data released by the Federal Housing Finance Agency on Thursday. The Dodd-Frank Act Stress Tests report indicated that the two GSEs would need a second taxpayer bailout, this time of up to $157.3 billion, under hypothetical adverse economic conditions that included a rise in the nation's unemployment level up to 10 percent by the middle of 2016 and a decline in real GDP as large as 4.5 percent by the end of 2015.
The two GSEs required a taxpayer bailout of $188 billion in 2008 but returned to profitability in 2012. Fannie Mae and Freddie Mac and all financial institutions with more than $10 billion in assets are required by a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to take an annual stress test to determine if they can absorb losses when adverse economic conditions strike. The findings of the FHFA's report are not expected outcomes, but rather modeled projects in what if scenarios.
Ocwen Financial rebounded from a tumultuous 2014 that included legal troubles, multi-million dollar settlements and ratings downgrades with a preliminary Q1 2015 net income of $34 million, according to an announcement from the company on Thursday afternoon. President and CEO Ron Faris said he was "proud of what we have accomplished as far as managing the business through this difficult transition period" but that the company intends to do better than the $34 million they made in the first quarter.
