Fannie Mae's $59.4bn dividend to Treasury Fannie Mae, the US mortgage giant rescued by the federal government during the 2008 financial crisis, will pay a $59.4bn dividend to the US Treasury, taking taxpayers closer to generating a positive return on the bailout. The company took $116.1bn in public funds to cover losses on trillions of dollars of mortgages it had purchased or guaranteed. The latest payout will take the total dividends it has paid to the Treasury to $95bn. Fannie Mae and its rival Freddie Mac remain under government conservatorship, awaiting political direction on how to wind them down and recast US government support for the country's housing market. Its results came a day after Freddie Mac posted the second-best quarterly profit in its history and said its total dividends to the Treasury would reach $36.6bn by June, compared with its bailout of $71.3bn. The large payouts could recast the political calculus over the future of Fannie and Freddie as the Obama administration tries to install a new head of the Federal Housing Finance Agency, which regulates the two companies. Mel Watt, a Democrat representative from North Carolina who has long argued for government support for affordable housing, was nominated last week but attracted immediate opposition from some Republican lawmakers. Moody's, the rating agency, published a report on Wednesday predicting Fannie and Freddie would remain dominant forces in the mortgage market because political wrangling would delay reform. John Dalton, president of the housing policy council of the Financial Services Roundtable, an industry lobby group, said: "It is good news that both Freddie Mac and Fannie Mae are returning money to the taxpayers . . . but we now need to move forward on a new secondary market system that includes a larger role for private capital, with a more limited and defined government role." The scale of Fannie Mae's latest dividend payment resulted from changed accounting treatment of deferred taxes of $50.6bn. Fannie Mae was unable to recognise the value of deferred taxes until it was clear the company would have sustainable future profits and therefore tax liabilities against which they would be offset. By recognising the tax asset in its latest quarterly results, published on Thursday, the company's net worth swelled to $62.4bn. Under revised bailout terms imposed last year, all but $3bn of Fannie and Freddie's net worth must be handed to the US Treasury in the form of dividends. The government's controlling stake is not being reduced by the payments. "As a result of actions to strengthen its financial performance and continued improvement in the housing market, Fannie Mae's financial results have improved significantly over the past five quarters," the company said in a statement. Fewer US homeowners are falling behind on their mortgages, and the losses Fannie Mae expects to absorb on foreclosed homes are lower due to rising house prices. At the same time, it has tightened standards and raised fees for guaranteeing new home loans. Net income at Fannie Mae was a record $58.7bn in the three months ended March 31, including the new accounting treatment of the tax asset, compared with $7.6bn in the fourth quarter of 2012 and $2.7bn in the first three months of 2012. Pre-tax income of $8.1bn was also a record. The company reduced its provisions against losses on mortgages by $957m, compared with a year-ago period when it was still stockpiling cash to cover defaults by homeowners.