Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) has recently announced a dividend to the treasury, which is its smallest dividend to date. FNMA announced that it would pay $1.8 billion for the current quarter. The small size of the dividend is an indication that the company has still not recovered from its long-term interest rates.
FNMA reported an increase in profits, quarter-over-quarter, from $1.3 billion to $1.9 billion. The company CEO, Timothy Mayopoulos, stated that the federal agency should be profitable over a yearly basis. FNMA is working with fellow federal agency, FMCC, towards offering of single securities to increase business flow. This would be the best effort by the two companies to reverse the effects of real estate meltdown, brought about by the recession in 2008.
FNMA released critical details about the single security, stating that it was finalizing the format and should offer it by the year end. This would be the first time that the two mortgage firms work together as a single unit, but would still fall under government control. Exercising a joint operation over the securities would help improve the liquidity of securities offered by the two companies.
However, the main problem for the two companies is their being under federal control. Although this gives them an advantage of being backed by taxpayers in case of a meltdown, but it also means that the two companies cannot have their own capital. The government had spent $116.1 billion on the bailout, but it has received $138.2 billion in profit returns. Unfortunately, none of this amount has been saved as capital for the two mortgage firms, which makes progress difficult. Some senators like, Pat Toomey, have been voicing these concerns. The senate is all set to pass a new legislation, which prevents the treasury from selling its preferred shares in the two mortgage companies, indicating that the treasury is not ready to let go of FNMA and FMCC just yet.
Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) closed at $2.60, after losing 0.57% on May 26. A total of 1.16 billion FNMA shares changed hands yesterday.