Fannie Mae Preferred S (FNMAS)

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F&F to repay U.S.Treasury sooner:

Reuters – 2 hours 31 minutes ago

WASHINGTON (Reuters) - Revamped terms of Fannie Mae and Freddie Mac's taxpayer-funded bailout that went into effect this year will allow the mortgage finance firms to repay the Treasury sooner than would have otherwise been the case, a federal watchdog said on Wednesday.

...The two companies have now returned to profitability, and under the new terms, their earnings are swept into the Treasury as a dividend payment for the government's stake in the firms. If they are not profitable, no sweep is made. ...

"The change in the dividend structure also will affect quarterly payments to Treasury, potentially resulting in the enterprises returning more money to federal taxpayers sooner."

The two so-called government-sponsored enterprises, or GSEs, will also see changes in quarterly payments to Treasury under an accounting method where they start recording potential tax credits, known as deferred tax assets, as part of their net worth, the report concluded.

The new bailout terms, which were announced in August, were intended to move up plans to shut the companies down, but they do little to address how that might be achieved or how the government's footprint in the mortgage finance market might shrink. Fannie Mae, Freddie Mac and the Federal Housing Administration finance nine out of every ten new home loans.

Fannie Mae has already raised the possibility that it could soon be required to send about $61.5 billion to the U.S. Treasury if it begins to account for deferred tax assets. The company has delayed filing its earnings report for the fourth quarter to further study the accounting issue, but said it expects to post a significant profit.

"Indeed, because of accounting treatment, sustained profitability of the (GSEs) could result in a one-time large dividend payments to Treasury from each," the report stated.

Freddie Mac has said that in future periods it will assess the need for a reduction of its deferred tax asset valuation allowances, which could have a material effect on its financial position. The company, in its annual report, said that current conditions didn't require it to reverse any of its $31.7 billion in deferred tax assets as of the end of 2012.

http://finance.yahoo.com/news/fannie-mae-freddie-mac-repay-041021094.html

Let's be brave towards the good news as we've been over the years with all the bad news...