Did you know that Fannie Mae and Freddie Mac borrowed $187.5 Billion dollars from the U.S. Treasury? Did you know that they’ve since repaid $202.9 Billion? That’s $15.4 Billion MORE than they borrowed.
BUT did you know that NONE of the $202.9 Billion went towards paying the principal owed? Instead that money was “dividends” paid to the Treasury. Why does this matter? Fannie and Freddie have built in “g-fees” to their interest rates to increase their profits and repay their debts. In layman’s terms: their charging higher rates to consumers.
Interesting note: the GSEs are able to make these record profits because in 2006 they had 24% of the market share and now in the post mortgage meltdown era they have 68% of the market share.