Future losses at Fannie Mae and Freddie Mac will be driven not by their operating results, but by the fact that they must continue to pay the U.S. Treasury hefty dividends on the preferred stock the government owns in the two, according to a new report from Keefe, Bruyette & Woods.

KBW noted that because of this financial albatross hung around the necks of the GSEs, their shares – which are traded on the OTC market – essentially have no value.

Freddie earned $676 million in 1Q while Fannie lost $6.5 billion. Both figures, however, are before dividend payments. When those payments are factored in, Freddie lost $929 million, and Fannie $8.7 billion.

The seriously delinquent ratio at both GSEs is improving and their ‘book of business’ for the past three years has been impeccable, quality wise.

Since being taken over by the government in the fall of 2008, certain executives at both Fannie and Freddie have appealed to the U.S. Treasury to reduce the dividend payments, but to no avail.

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