WASHINGTON Fannie Mae, the secondary mortgage market giant run under government conservatorship since September 2008, reported $7.6 billion in profits for the fourth quarter of 2012 and a record $17.2 billion for the year, the latest signal that the mortgage crisis is near an end.
The announcement comes a month after Freddie Mac, Fannie’s sister government sponsored enterprise also taken over in 2008, reported a record $11 billion profit for 2012.
The record earnings for the two companies is sure to throw a wrench into congressional plans to reform the secondary market, which until recently have been predicated on the premise the two companies are unfixable. The two companies buy more than half of all single-family mortgages originated by credit unions and banks, then repackage many of them for sale on the secondary market to be bought by credit unions and other institutional investors.
Fannie’s $17.2 billion 2012 profit compares to a $16.9 bill loss for 2011. The improvement in the company’s full-year and quarterly net income was due primarily to improved credit results driven by a decline in serious delinquency rates, an increase in home prices, higher sales prices on Fannie Mae-owned properties, and the company’s resolution agreements with Bank of America.
“Our financial results improved significantly in 2012 and we expect our earnings to remain strong over the next few years,” said Timothy Mayopoulos, president of Fannie Mae. “We have taken a number of actions since 2009 to manage our legacy book of business, build a healthy new book of business with responsible underwriting standards, price appropriately for risk, and reduce uncertainty by resolving outstanding issues. These actions have helped to strengthen our financial performance and to support the housing recovery by enabling families to buy, refinance, or rent a home even during the housing crisis.”
