Average US rate on 30-year mortgage remains at 3.65 percent

Mortgage giant Fannie Mae reported a jump in net income in the fourth quarter, as derivative bets on interest rates paid off. The company said one reason for the decline was a reduction in income resulting from settlement agreements related to private-label mortgage-related securities sold to Fannie Mae.

The total year-end single-family business net income for 2015 reached $5.1 billion, compared with $8.5 billion in 2014.

Freddie Mac (FMCC.OB) reported Thursday that its fiscal 2015 net income was $6.38 billion, lower than last year’s $7.69 billion. It also said Friday, Feb. 19, 2016 that it expects to pay the U.S. Department of Treasury $2.9 billion in dividends next month.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.85 percent this week with an average 0.4 point, up from last week when it averaged 2.83 percent.

Fannie Mae and Freddie Mac buy mortgages from lenders and package them into securities, on which they guarantee to investors principal and interest payments. Director Watt has shown exemplary leadership in openly discussing the challenges and risks associated with the drawn-out conservatorship of Fannie Mae and Freddie Mac, including the scheduled elimination of their capital reserves. In return, the government received warrants to acquire almost 80% of the companies’ common stock along with a new class of preferred shares that originally paid a 10% dividend. In 2016, Fannie and Freddie are permitted to have a buffer of $1.2 billion each.

According to the most recent quarterly reports, the GSEs have returned $243 billion in dividends to the government, which is almost $56 billion more than the combined bailout of $187.4 billion.

“While it’s not my place to meddle in political discussions, I’m also not hearing much discussion of housing-finance reform in any of the presidential campaigns”, Watt said. Fannie has about $118 billion of its credit line remaining, while Freddie has about $141 billion remaining.