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Record profit for Fannie Mae

By Judy Martel ·
Monday, August 13, 2012
Posted: 5 pm ET

Fannie Mae is on a roll, reporting a second-quarter profit of $5.1 billion, compared with $2.7 billion in the first quarter. It's the largest profit since the nearly $142 billion taxpayer bailout of Fannie Mae and Freddie Mac in 2008. Freddie Mac reported a $3 billion profit, compared with $577 million in the first quarter.

The higher profits are attributed to rising home prices and a reduction in loan-loss provisions. The two mortgage companies also have tightened lending standards since 2009, leading to better-quality loans.

Fannie Mae moved $3 billion out of its loss-reserve account in anticipation of fewer losses going forward. The company has not asked the Treasury Department for financial assistance for two quarters in a row, leading some analysts to take this as further proof that the housing market is stabilizing at last.

In a statement, Timothy J. Mayopoulos, chief executive of Fannie Mae, said: "While it is too early to declare a national housing recovery and our results for the second half of 2012 may not be as strong as the first half, we expect our financial results in 2012 to be substantially better than the past few years."

There are a couple of hurdles ahead before the year is out: Buying activity typically slows in the second half of the year, and there is a backlog of foreclosed homes to sell, both of which could lower future earnings.

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Patti Sewall
August 14, 2012 at 1:42 pm

While I am certainly glad for the hint of an overall housing and/or economic recovery for the sake of our nation and her people, like me, who are struggling, I can't help but laugh at some of the statements in this piece. And by laugh, I mean that if I don't laugh I'll cry. “Fannie Mae is on a roll,” reporting “the largest profit since the nearly $142 billion taxpayer bailout” in 2008. Are you kidding me? And, “the company has not asked the Treasury Department for financial assistance for two quarters in a row.” How nice for you, Fannie. My situation is quite different. My Wells Fargo mortgage -- owned by Fannie Mae -- is about to tumble over the rocky cliff, carrying me and my credit rating with it. I'm a 57-year-old unemployed woman carrying around a once-plump, now-empty 401K retirement account who's about to lose her tiny home of 19 years. Where is my bailout? You want to keep your profits going, Fannie? Try paying it forward for a change.