Fannie Mae had first-quarter profit, needs no new taxpayer funds

By Jim Puzzanghera

May 9, 2012 12 AM PT

<i>This post has been corrected. See the note below for details.</i>

WASHINGTON — Fannie Mae on Wednesday reported a $2.7-billion profit for the first three months of the year and will not need new taxpayer money for the first time since the government seized the housing finance giant in 2008.

Fannie Mae said the improvement in its finances came from a slower decline in housing prices, a lower rate of homeowners behind on their payments and fewer foreclosed homes on the company’s books.

The profit was its first since the fourth quarter of 2010, when Fannie Mae made about $73 million. But even with a profit then, the company needed $2.6 billion from the federal government to stay afloat.

It has received about $116.2 billion in taxpayer money since it was placed into government conservatorship in 2008. Fannie Mae buys and insures mortgages and, along with Freddie Mac, plays a crucial role in the housing fiance market.

On Wednesday, Fannie Mae said it would not need government aid to cover its first quarter expenses and expected its 2012 financial performance to be better than last year’s.

“Today’s results exemplify the tremendous progress we have made since 2009,” said Chief Executive Michael J. Williams.

The announcement marked a potential turning point in one of the most expensive bailouts stemming from the financial crisis. In addition to the money given to Fannie Mae, the government has pumped an additional $71.3 billion into the smaller Freddie Mac.

Last week, Freddie Mac reported a $577 million profit for the first quarter of the year, but requested an additional $19 million from the government to help make its $1.8 million dividend payment. Freddie Mac received $146 million for the fourth quarter of last year but has not required taxpayer money in four different quarters since 2008.

For the record, 12:30 p.m. May 9: An earlier version of this post said Freddie Mac reported a net loss of $1.2 billion last week for the first quarter of 2012. Actually, Freddie Mac had a $577-million profit.

Fannie, Freddie are set to reduce mortgage balances in California

Mortgage-aid revisions paying off for lenders and some borrowers