The Fannie Mae reported first quarter profit, which is less than the profit in the same quarter last year. The huge derivative loss and decrease in credit related income has contributed to this lost. The mortgage finance firm will be sending the U.S. central bank $1.8 billion amount in June.
The Washington based company have paid back total $138.2 billion to tax payers as of now. The financial crisis of 2008 resulted in the conservatorship of United States government on Fannie mae and Freddie Mac, another financial services provider. The Freddie was granted $71.3 billion relief package by the government went the company went bankrupt in 2008. Similarly the government sanctioned $116.1 billion to rescue Fannie Mae. The analysts projected $2.6 billion income in first quarter for the company but it only managed $1.9 billion. The income was $5.3 billion in the first quarter last year. The finance firm doesn’t provide loans by its own.
The lenders sell its profitable loans to the company and the Fannie converts them into securities. The investors then have option of purchasing a loan for profit. In order to ensure the stability in the business, the company introduced minimum credit standards that borrowers have to fulfill before mortgage benefits. Lenders have also created their own set of stricter regulations in order to avoid the penalties from Fannie. Chief Executive Officer Timothy J. Mayopoulos of Fannie Mae made the agreement with lenders public to clear the air over penalties issue last year. The agreement resulted in more secure lending.