WASHINGTON, Aug 8 (Reuters) – Fannie Mae on
Wednesday reported a quarterly profit due to stronger home
prices and said the mortgage financier did not need additional
taxpayer funds to stay solvent, the second consecutive quarter
the company did not request help since it was seized by federal
authorities during the financial crisis.
Fannie Mae, which buys mortgages from lenders and repackages
them as securities for investors, said it earned $5.1 billion
for the second quarter ending in June, enough to keep the
company afloat and make a required $2.9 billion dividend
repayment to the U.S. Treasury.
“We think that there is a reasonable chance that we can make
a profit for the rest of the year,” Fannie Mae’s chief financial
officer Susan McFarland said in an interview.
The higher home prices and a decline in the company’s
single-family delinquency rate underpinned Fannie Mae’s $7.8
billion profit for the first half of the year. In the same
period a year earlier, the government-controlled company lost
$9.3 billion.
McFarland called the second-quarter housing prices “normal
seasonal improvement” and said she did not expect to see this
kind of trend continuing. “There is a high likelihood that we
will see home prices come down in the latter half of the year,”
she said. Because of that, the company does not expect its
financial results to be as strong in the latter half of the
year compared to the first half.
The latest data showed U.S. home prices rose for the fourth
month in a row in May, suggesting the recovery in the housing
market is gaining traction after the 2007-09 collapse.
REPAYMENTS
Fannie Mae has drawn down $116.1 billion in taxpayer money
and has repaid the U.S. Treasury $25.6 billion, or 22 percent of
the company’s government funds. The mortgage finance giant’s
smaller sister company Freddie Mac has drawn $72.3
billion in taxpayer funds since it was taken over and has made
about $20.1 billion in repayments.
Although Fannie Mae did not need taxpayer funds this quarter
to help cover required 10 percent dividend repayments, McFarland
said she expects there may be periods where the company’s income
would not be sufficient enough to meet the requirements.
“A lot of things are out of our control with the economy
being soft,” she said. “We have to be a bit cautious before we
declare permanent victory and that we will be able to sustain
profits quarter in and quarter out.”
On Tuesday, Freddie Mac said it earned $3 billion for the
three months ending June 30, due to a decline in credit losses.
The company also said it did not need additional funds from the
U.S. Treasury.
