Fannie earns record annual gain
WASHINGTON, USA
FANNIE Mae earned US$17.2 billion last year, the biggest annual profit in the US mortgage giant’s history, helped by a record fourth quarter. The 2012 gain was driven by the housing recovery, which has reduced delinquencies and lifted home prices
six years after the
bubble burst.
The government-controlled company also said Tuesday that it paid dividends of US$11.6 billion to the US Treasury in 2012. Fannie says it expects to remain profitable “for the foreseeable future”.
The company did not seek any federal assistance in 2012. That followed a year in which the company reported a net loss of US$16.9 billion and requested US$25.9 billion in federal assistance.
Taxpayers spent US$188 billion to rescue Fannie and smaller sibling Freddie Mac from their exposure to risky loans that trigged the 2008 financial crisis. Fannie received US$116 billion and has paid back US$35.6 billion.
Freddie received US$72 billion and has paid back nearly US$24 billion.
The gradual recovery of the housing market has enabled both companies to become profitable again. Freddie has posted positive net earnings for the past five quarters.
“Our financial results improved significantly in 2012, and we expect our earnings to remain strong over the next few years,” Timothy Mayopoulos, Fannie’s president and CEO said in a statement.
Fannie earned US$7.6 billion in the October-December quarter, a quarterly record for the company. A legal settlement with Bank of America provided US$1.3 billion of the gain. Fannie paid the Treasury a quarterly dividend of US$2.9 billion.
Under a federal policy adopted last summer, Fannie, and Freddie must turn over their quarterly profits to
the Government.
The fourth-quarter earnings compared with a net loss of US$2.4 billion in the final quarter of 2011.
Fannie and Freddie together, own or guarantee about half of all US mortgages, or nearly 31 million home loans. Those loans are worth more than US$5 trillion. Along with other federal agencies, they back roughly 90 per cent of new mortgages.
AP