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Record profit for Fannie, Freddie

By Judy Martel · Bankrate.com
Wednesday, April 3, 2013
Posted: 10 am ET

Rising home prices, low mortgage rates and increased refinance activity helped boost mortgage company Fannie Mae to a record annual profit in 2012.

The $17.2 billion profit is the company's first since 2006. Fannie's rival, Freddie Mac, posted record earnings in 2012 of $11 billion.

In 2008, Fannie Mae and Freddie Mac, which together guarantee two-thirds of home mortgages, were bailed out by U.S. taxpayers and put under the governance of the Federal Housing Finance Agency. During the height of the housing bust, the two companies were bleeding money: From 2007 to 2011, they lost $166.6 billion in 17 of 18 quarters.

Rising home prices mean Fannie and Freddie are recouping more from foreclosed properties. In addition, stricter lending standards mean that fewer borrowers are at risk of defaulting on their mortgage. Greg McBride, senior financial analyst for Bankrate.com, says that over time, the improvements will translate into good news for investors and borrowers. "Longer-term, if Fannie and Freddie are profitable, the buyback risk to lenders diminishes, which will increase willingness to lend," he says. "But again, that's a longer-term development."

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3 Comments
Mike
April 04, 2013 at 4:21 pm

Looks like HARP 2.0 is helping these companies make some $$

Christina Ngo
April 04, 2013 at 2:17 pm

I don't think it is fair these lenders make so much profit off the economy,
and at the expense of (confused and frustrated) home owners.

I refianced in 2019 at 4.25 % for a 7 year ARM.

My property is estimated at, either with a 5% equity or under water.
I have contacted many lenders but they all refused since
I refi after 2009 (not qualified for Harp) I
do not meet modification guidlines.

I have excellent credit and great income.
does that mean anything anymore?

Can someone guide me in the right directions.
I would very much appreicate.

Thank you

Christina Ngo