Freddie Mac, Bank Bailout | featured news

The Treasury said on Friday it is changing the way Fannie Mae and Freddie Mac will repay taxpayers in a move the Obama administration said would accelerate the winding down of the government-owned mortgage financiers.

Fannie Mae and Freddie Mac, the two mortgage-finance giants, this week reported some of their best quarterly results since the real estate collapse. On Wednesday, Fannie Mae posted second-quarter net income of $5.1 billion. That is up from $2.7 billion in the first quarter of this year and an improvement from a net loss of $2.9 billion in the second quarter of last year. Fannie requested no additional money from the Treasury and said it would pay a $2.9 billion dividend to taxpayers.

The federal regulator for Fannie Mae and Freddie Mac said it would eliminate performance-based bonuses for senior executives at the two mortgage-finance firms.

Freddie Mac's chief executive, Charles E. "Ed" Haldeman Jr., will step down by the end of the year, the regulator of the company said on Wednesday.

Mortgage finance giant Freddie Mac FMCC.OB said on Monday it would ask for an additional $1.5 billion from taxpayers due to losses stemming from the weak housing market.

A federal watchdog criticized federal regulators' oversight of executive pay packages for top officials at Fannie Mae and Freddie Mac in a report published Thursday. The top six executives at the mortgage giants earned $35 million in the last two years, according to the report from the inspector general of the Federal Housing Finance Agency, which regulates the mortgage giants.

The Obama administration on Friday released its long-awaited proposal for overhauling the mortgage market, calling for gradually shutting down bailed-out Fannie Mae and Freddie Mac and reducing the government's now huge role in housing finance.

House Republicans say it is time to end a costly federal bailout of Fannie Mae and Freddie Mac that has already cost taxpayers $150 billion.

The total cost to rescue and then overhaul mortgage giants Fannie Mae and Freddie Mac could reach $685 billion, according to estimates by Standard & Poor's.

Freddie Mac posts $4.1 billion loss for third quarter, seeks additional $100 million in aid.