Who would have thought that Freddie Mac and Fannie Mae would someday be cash cows that just keep on giving?

Ten years ago, Freddie and Fannie were on the verge of collapse with an outstanding loan portfolio of $5T in danger of default. The Treasury Department issued bailouts for Freddie and Fannie, saved 40% of home loans and saved the housing market.

“The most amazing thing is that the housing market not only survived but thrived coming out of the crisis,” said Jaret Seiberg, a financial services and policy analyst with Cowen Washington Research Group. “What the government did actually worked.”

After the bailout, the Federal Housing Finance Agency (FHFA) placed the two entities into government conservatorships. Treasury Secretary Henry Paulson then essentially called a “time out” and infused each entity with billions of dollars to back up their respective home mortgage portfolios. Fannie got $119.6B and Freddie got $71.6B

In return for their liquidity, Fannie and Freddie were required to pay the Treasury Department a regular 10% dividend as part of the deal. When both Fannie and Freddie became profitable again in 2012, the Treasury Department and FHFA revised the deal, giving the Treasury Department all of Freddie and Fannie’s profit on a quarterly basis.

In 2017, the Treasury Department and FHFA revised the deal again. This most recent iteration of the agreement states that Freddie and Fannie are allowed to keep and maintain $3B in capital before paying the remainder of the profits back to the Treasury Department.

So far, Fannie Mae has paid back $167.3B on its loan of $119.6B and Freddie Mac has paid back $191,4B on its loan of $71.6B. Doing the math, it turns out the Treasury Department has drawn a net profit of $88.3B while Freddie and Fannie continue to pay.

“Taxpayers are the ultimate vulture investors here. We bought out the loans when nobody else would come in and, as a result, the taxpayers are reaping the rewards. So this is a great deal for taxpayers,” said analyst Jaret Seibert.

Today, along with the Federal Housing Authority, Fannie and Freddie back the vast majority of new home loans in this country. Investors continue to buy these mortgage-backed securities from Fannie and Freddie BECAUSE the government backs these securities.

Prices are now nearly +11% higher than the 2006 peak height of the housing boom, according to the S&P CoreLogic Case Shiling Index. And now, due to the recovery over these last 4 years, mortgage underwriting has eased so much that new mortgages with FICO credit scores less than 750 have gone from 41% in 2009 to 53% in 2017, according to a recent FICO report.

How long Freddie Mac and Fannie Mae remain under government conservatorship is anyone’s guess. There have been whisperings of privatizing these entities for some time now but, because of their vast influence on the housing market via home loans and their profitability on behalf of taxpayers, perhaps the question ought to be, why not leave well enough alone?