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Originally published Wednesday, May 8, 2013 at 5:35 AM

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Freddie Mac posts $4.6B net income for Q1

Mortgage giant Freddie Mac earned $4.6 billion from January through March, helped by a stronger housing market. The government-controlled company has turned a profit in the past six quarters.

AP Business Writer

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WASHINGTON —

Mortgage giant Freddie Mac earned $4.6 billion from January through March, helped by a stronger housing market. The government-controlled company has turned a profit in the past six quarters.

Freddie said Wednesday that it will pay a dividend of $7 billion to the U.S. Treasury next month and requested no additional federal aid for the fourth consecutive quarter.

The earnings compared with net income of $577 million in the first quarter of 2012.

The government rescued Freddie and larger sibling Fannie Mae during the financial crisis after both incurred massive losses on risky mortgages. The companies received loans about $170 billion, the costliest bailout of the crisis. So far, the companies have repaid a combined $62.2 billion.

The companies are benefiting from a housing recovery that began a year ago. Record-low mortgage rates and slow but steady job growth have helped bring buyers back to the market. Home sales and construction have increased. And home prices are rising at the fastest pace six years, driven by higher demand and a limited supply of homes for sale.

For Fannie and Freddie, a better housing market means fewer delinquent loans on their books. The improvement has also allowed the companies to charge mortgage lenders higher fees to guarantee the loans.

Under a federal policy adopted last summer, Fannie and Freddie must turn over any quarterly profits to the government.

Freddie, based in McLean, Va., earned $11 billion last year and paid $7.2 billion in dividends to the U.S. Treasury. It requested no government aid in the second, third and fourth quarters last year.

Fannie, based in Washington, reported last month that it earned $17.2 billion last year and said it expects to stay profitable for "the foreseeable future." It also paid $11.6 billion in dividends to the U.S. Treasury in 2012. Last year was also Fannie's first since its takeover by the government in 2008 that it asked for no federal aid.

Fannie and Freddie don't directly make loans. Rather, they buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. In doing so, they help make loans available and exert influence over the housing market.

Together, Fannie and Freddie own or guarantee about half of U.S. mortgages - nearly 31 million home loans worth $5 trillion. And along with other federal agencies, they back about 90 percent of new mortgages.

The Obama administration proposed a plan in 2011 to slowly dissolve Fannie and Freddie, with the goal of shrinking the government's role in the mortgage finance system. But Congress hasn't yet decided how far the government's role should be reduced.

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