Fannie Mae earned $8.7 billion in the third quarter ended September 30, its seventh straight profitable quarter.

Washington-based Fannie reported Thursday its earnings were boosted by the rise in home prices during the quarter, which helped it reduce its reserves set aside for losses on mortgages.

The government-controlled company will have nearly repaid in full its taxpayer bailout of five years ago, after paying its third-quarter dividend.

Fannie expects to pay a dividend of $8.6 billion to the U.S. Treasury next month, bringing its payments to an estimated $114 billion. Fannie received about $116 billion from taxpayers when the government rescued it and smaller sibling Freddie Mac during the financial crisis, after they incurred massive losses on risky mortgages. Together they received aid totaling about $187 billion. The earnings for the latest period compared with net income of $1.8 billion in the third quarter of 2012.

The housing recovery that began last year has made Fannie and sibling Freddie Mac profitable again. Their repayments of the government loans have helped make this year’s federal budget deficit the smallest in five years.

Fannie and Freddie own or guarantee about half of all U.S. mortgages, worth an estimated $5 trillion. Along with other federal agencies, they back roughly 90% of new mortgages.
President Obama has proposed a broad overhaul of the U.S. mortgage finance system, including winding down Fannie and Freddie.

The goal is to replace them with a system that would put the private sector, not the government, primarily at risk for the loans. The government would still be involved, both in oversight and as a last-resort loan guarantor.

Obama also wants a guarantee that private lenders will make sure homeowners have access to 30-year fixed mortgages.

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