Fannie Mae Takes $9.9B Hit From Tax Law

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The new tax rules forced Fannie Mae to take a one-time charge of $9.9 billion based on the reduced value of its assets, producing a loss of $6.5 billion in the fourth quarter of 2017. Fannie Mae said on Friday it would soon send the U.S. Treasury $7.2 billion, a profit-related dividend that makes taxpayers whole for the 2008 bailout of the mortgage-finance giant and its sibling company Freddie Mac.

Fannie Mae saw net income of $2.5 billion in 2017, compared with $12.3 billion in 2016, according to its quarterly report.

"Americans deserve better", he said in a statement.

The two so-called government-sponsored enterprises, which securitize and guarantee mortgages originated by other lenders, have been under conservatorship since September 2008, when the US government engineered a bailout at the height of the financial crisis. Freddie Mac paid $11 billion to the exchequer in 2017. Some members of Congress and other policy makers have said the companies should be replaced with a system that doesn't leave taxpayers on the hook for losses, but no plan has gained enough traction to be implemented. Its net interest income in the fourth quarter, which includes fees to guarantee mortgages, was $5.1 billion compared with $5.8 billion in the year before.

"Our 2017 results demonstrate that the fundamentals of our business are strong", Mayopoulos says.

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In an interview, Mayopoulos said he believed investors in the company's mortgage bonds won't be spooked by the need for taxpayer money.

In its fourth quarter report, Fannie Mae said it "expects to remain profitable on an annual basis for the foreseeable future".

Despite taking a loss in its final quarter, Fannie Mae benefitted from improvements in the housing market - the home-price index increased 5.6 percent in the fourth quarter. The company said it expects the FHFA to request $312 million from the Treasury.

Spokeswomen for the Treasury Department didn't immediately respond to a request for comment.