WASHINGTON, DC—Both Fannie Mae and Freddie Mac have posted profits for the first quarter of 2014; however these profits have been made heftier thanks to settlement of litigation with banks over certain mortgage-backed securities they issued before the start of the financial crisis.
Freddie Mac reported net income of $4 billion for the period, its tenth consecutive quarterly profit. The GSE received $4.9 billion from the settlements.
As GlobeSt.com reported earlier, Fannie Mae reported net income of $5.3 billion for the first quarter of 2014, its ninth consecutive quarterly profit. About $4.1 billion of its revenues came from legal settlements relating to private-label securities lawsuits.
The news follows a report from the Congressional Budget Office noting that the GSEs’ profits have helped drive down the budget deficit in fiscal year 2014.
The profit reports, along with public skepticism in some quarters that the GSEs can maintain these profits, will no doubt be front and center next week as the Senate Banking Committee debates the housing-finance reform bill.