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And the proportion of loans Fannie holds or guarantees that are at least 90 days' delinquent is down: The figure dropped to 3.3 percent at the end of 2012, compared with 5.5 percent in early 2010. Ely, the industry analyst, thinks their financial improvement also reflects higher fees that Fannie and Freddie now charge banks to guarantee their mortgages. Fannie earned $7.6 billion in the October-December quarter, a quarterly record for the company. About $1.3 billion of the gain came from a settlement paid by Bank of America Corp. related to mortgages that soured during the housing crash. Fannie paid the Treasury a quarterly dividend of $2.9 billion. Under federal policy, Fannie and Freddie must give their profits to the government. Fannie's fourth-quarter earnings compared with a net loss of $2.4 billion in the final quarter of 2011. "Our financial results improved significantly in 2012, and we expect our earnings to remain strong over the next few years," Timothy Mayopoulos, Fannie's CEO, said in a statement. After their takeover by the government, Fannie's and Freddie's pay and bonus structure came under fire when it was revealed that 12 executives received a total of $35.4 million in salary and bonuses in 2009 and 2010. Fannie's chief executive received about $9.3 million for the two years, Freddie's $7.8 million. Once mainstays of the New York Stock Exchange, the stocks of both companies traded above $60 in 2007. Since 2010, both have been listed on the Over-the-Counter Bulletin Board, an electronic quotation service. They're trading below $1.
Since taking control, the government has owned 80 percent of each company, and a federal regulator has made financial decisions. The government provided taxpayer aid in exchange for preferred stock in the two companies. The stock pays 10 percent interest, which Fannie and Freddie have been repaying in dividends each quarter in which they make a profit. Freddie has received $72 billion in federal aid and paid back nearly $24 billion. Freddie has reported positive earnings for five straight quarters. Fannie and Freddie have since tightened their credit standards for the borrowers whose loans they back. And early last year, under pressure from Congress, the companies' regulator capped pay for their CEOs at $500,000 a year and eliminated annual bonuses for all employees. As recently as mid-2011, some experts had suggested that Fannie and Freddie were so deep in debt to the government that it could take decades for them to repay taxpayers. But the past 12 to 18 months have marked a solid advance for the housing market, noted Ken Mayland, president of ClearView Economics, and Fannie and Freddie will continue to benefit. "It's a spirited recovery," he said. "The housing sector will be by far the strongest (economic) sector growth-wise."
[Associated
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