The cost of keeping the Federal National Mortgage Association and the Federal Home Loan Mortgage Corp. solvent is dropping fast, and neither of the government-controlled enterprises is expected to require any further taxpayer assistance after this year.
The estimates were made in a report issued Friday by the secondary lenders’ regulator, the Federal Housing Finance Agency.
Since Fannie Mae and Freddie Mac were seized during the Bush administration in 2008, their conservatorships have cost U.S. taxpayers $187.5 billion, according to the FHFA.
Fannie’s portion was $116.1 as of June 30, based on its second-quarter earnings report, though it has paid out $25.6 billion in dividends to the Department of the Treasury. At Freddie, draws as of June 30 totaled $72.3 billion, and dividend payments amounted to $20.1 billion.
Second-quarter earnings before income taxes at Washington, D.C.-based Fannie were $5.1 billion, surging from $2.7 billion in the first quarter. At McLean, Va.-based Freddie, second quarter net income prior to taxes shot up to $2.9 billion from $0.6 billion.
The report outlines three scenarios that estimate cumulative draws as of year-end 2015 to be at between $191 billion and $209 billion. The projections assume as much as $22 billion in additional draws.
Excluding dividend payments, the cumulative draws would range from $67 billion to $138 billion.
Fannie’s cumulative portion of draws is expected to be from $118 billion to $133 billion, while Freddie’s is between $73 billion and $76 billion.
In all of the three scenarios, Freddie doesn’t require additional draws after this year, while Fannie doesn’t require additional draws after 2012 in two of the scenarios.
The FHFA noted that projections have substantially improved from a year ago as a result of better-than-expected financial results, revised projections for future financial results and changes to the Senior Preferred Stock Purchase Agreements that eliminate dividends and go into effect on Jan. 1, 2013.
The projections are not expected outcomes, and FHFA said that they should be interpreted as a sensitivity analysis of future financial results to possible house price paths.
“The key drivers of those results include an overall reduction in actual and projected credit-related expenses and changes in the dividend structure contained in the PSPAs, which eliminates the need to borrow from Treasury to pay dividends,” the report stated.
