Four years after the federal home loan agency, Freddie Mac, began receiving $72.2 billion in bailouts from the American government, it posted $2.9 billion in profits for the third 2012 quarter. Although revenues are down from Q2 the report explains:

"The increase in comprehensive income for the third quarter of 2012, compared to the second quarter to 2012, primarily reflects fair value gains on the company's non-agency available-for-sale (AFS) securities due to spread tightening. The fair value of Freddie Mac's AFS securities may fluctuate considerably from quarter to quarter due to market conditions, which can lead to variability in the company's comprehensive income results."

In other words, recorded income is lower this quarter due to spread tightening, a process whereby risk is reduced as corporate and government bond yields are closer together. The reduced income isn't an altogether bad sign, and is a result of fluctuations in the market.

After its fourth profitable quarter, Freddie Mac paid a $1.81 billion dividend to the Treasury Department, marking the second quarter in a row that the company has paid down its debt. The profits follow positive signs from the housing market. In 2012, fewer homeowners have defaulted on their home loans and housing prices have steadily risen since 2009 after dropping slightly in 2011. Average home prices have climbed 5% since September 2011, but dropped slightly, 0.3 percent, from August to September.

Freddie Mac CEO Donald H. Layton issued a statement, “Our inventory of delinquent loans is at the lowest level in two years and our higher quality new book of business now comprises 60 percent of our portfolio.” Massive delinquency rates were the primary cause for government intervention in 2008.

The company has paid back $22 billion of the $72 billion loan at 0.14% interest. Under the Preferred Stock Purchase Agreement (PSPA) dividends are paid to the United States Treasury and will terminate upon completion of repayment. At the current pace Freddie Mac is on course to remit their profits beginning in 2013, hastening the course to paying back the taxpayer funded bailout.