US Mortgage insurer Fannie Mae issued its first-quarter results Wednesday, posting its highest profit since before the housing crisis, and said it would not need any more taxpayer assistance to continue to operate. The company said its profit was big enough to cover its latest debt repayment to the US Treasury, and forecast even better results in the coming quarter, noting that it believes losses on mortgages peaked at the end of last year.
In the three months through March 31st, Fannie earned a profit of $2.7 billion, the best its seen since reporting net income of $4.3 billion in the second quarter of 2004, well before the housing bubble burst. A spokesman for Fannie Mae cited a deceleration in the decline of home prices, successful unloading of foreclosures from its inventory and better sales prices for the homes it sold for the improvement in the first quarter.
The long-beleaguered US housing market has shown a number of signs of improvement in recent months, as record-low interest rates and rock-bottom home prices have finally begun to entice buyers back into the market. There is still, however, a massive supply of distressed properties on the market, which are preventing a real recovery in home prices as distressed properties are typically sold at a steep discount to non-distressed homes, dragging down the average price in communities across the country.
Together with Freddie Mac, Fannie owns or guarantees more than $3 trillion worth of US home mortgages, or nearly 70 percent of all outstanding home loans in the nation. When the housing bubble burst in 2007, the ensuing slide in home values drove a surge in foreclosures that resulted in billions of dollars in losses for the two firms. In order to stabilize the housing sector, government authorities seized Fannie and Freddie and pumped billions of dollars of taxpayer funds in to keep them afloat.
Since being placed under government conservatorship, Fannie has received $116 billion in bailout payments and has repaid $22.6 billion, including the $2.8 billion payment made in the first quarter. There have been a couple of quarters in which the company would have been profitable if not for the sizable repayments it has had to make, but its latest results represent the first time since the housing bubble burst it has recorded a profit without excluding the bailout dividend payments.