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DS News Webcast: Friday 11/7/2014

Fannie Mae and Freddie Mac are set to send another $6.8 billion to the U.S. Treasury after posting a mild increase in profits for the third quarter. For its part, Fannie Mae reported net income of $3.9 billion for the third quarter, up from a profit of $3.7 billion in Q2 but down from $8.7 billion from a year ago. The increase was driven primarily by lower fair value losses and an increase in revenues. A settlement between Goldman Sachs and the GSEs' conservator, the Federal Housing Finance Agency, over faulty residential mortgage-backed securities also contributed to Fannie Mae's profit boost.

Freddie Mac reported net income of $2.1 billion for Q3, up from $1.4 billion dollars for the prior three-month period. The company attributed the increase to lower derivative losses, stemming from an upturn in long-term interest rates, and the same RMBS settlement that benefited Fannie Mae. As a result of their profitable quarter, Fannie Mae says it expects to pay $4.0 billion in dividends to Treasury in December, while Freddie Mac will pay $2.8 billion.

While home sales prices posted moderate gains in September, the housing market recovery as a whole is moving slowly, according to the Wells Fargo Economics Group Housing Wrap Up for October 2014. New home sales increased by only 0.2 percent month-over-month in September after shooting up by more than 15 percent in August. The median price of new homes dropped sharply in September, declining by 9.7 percent month-over-month and 4.0 percent year-over-year. Homeownership rates tumbled to 64.4 percent in Q3, hitting their lowest point since 1995.

About Author: Jordan Funderburk

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