Fannie Mae is reporting a $2.2 billion profit for last quarter. This is only the second quarterly gain for the mortgage giant since being taken over by government conservatorship in 2008.
“We think home prices have stabilized,” Fannie Mae President and CEO Timothy Mayopoulos said in an interview on CNBC. The government-sponsored company paid the Treasury Department $2.9 billion after the earnings report.
Fannie Mae reported similar gains in the first quarter of 2012, bringing in a $2.7 billion profit and paying the Treasury Department $2.8 billion.
Taxpayers, however, shouldn’t be breathing a sigh of relief just yet. The corporation still owes the government a whopping $90 billion, having only repaid $25.5 billion of the $116 billion it was lent in 2008.
After 14 straight quarters in the dumps, some experts see the two consecutive profitable quarters as an indicator that the housing market is finally rebounding.
U.S. home prices, including for sales of distressed properties, were up 2.5 percent in June over last year’s monthly figure, according to a report issued Tuesday by data analytics firm CoreLogic.
Anthony Randazzo of the Reason Foundation, a free market think tank, told The Daily Caller News Foundation, however, that “the slowed rate of foreclosures is not an indication that housing is in recovery, as roughly one-fifth of homes in the U.S. remain underwater.”
Mayopoulos is also striking a cautious tune, saying that Fannie Mae’s ability to repay the government is “going to depend on home prices.”
Fannie Mae’s brother — mortgage lender Freddie Mac — also had a profitable quarter. It reported a $3 billion second quarter profit, going five quarters now without needing more taxpayer cash.
“It’s probably one of the most profitable quarters the company has ever had, pre- or post-conservatorship,” said Freddie Mac CFO Susan McFarland in a statement.
Randazzo in May wrote that Fannie Mae’s rebound is likely thanks to a decline in delinquency rates for single-family mortgages to .67 percent in the first quarter from 5.47 percent a year earlier.
Fannie and Freddie currently owe taxpayers a combined $146.5 billion.
Randazzo is weary of giving the lending giants credit for the profitable quarter. He told TheDC News Foundation the profits are “merely reflective of accounting methods and temporary housing price trends, not the overall health of the institution.”
Fannie and Freddie backed almost 90 percent of new U.S. mortgages in the past year. They also own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans, which are worth more than $5 trillion.
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