Fannie’s Record Profit a Symbol of Housing Rebound

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Fannie’s Record Profit a Symbol of Housing Rebound

Home prices are up. Foreclosures are down. Construction is up. And now comes the latest sign of the U.S. home market’s revival… Fannie Mae the mortgage giant that nearly collapsed five years ago has earned its biggest yearly profit ever. Fannie Mae earned $17.2 billion last year and said Tuesday that it expects to stay profitable for the “forseeable future.” It also paid $11.6 billion in dividends to the U.S. Tresury in 2012. It was the company’s first yearly gain since 2006, before the implosion in the  housing market necessitated multibillion-dollar bailouts of both Fannie  Mae and fellow taxpayer-backed housing finance company Freddie  Mac in 2008. Freddie Mac reported  a 2012 annual profit of $11 billion in February.

Fannie’s Record Profit a Symbol of Housing Rebound

Fannie Mae and Freddie Mac are  responsible for nearly 31 million mortgages, or about half of all home loans in  America. Together, the two mortgage giants received a total of $187.5 billion in bailout funds from the Treasury  Department, which has recovered more than $60 billion from dividend  payments. In 2012, Fannie Mae paid the government $11.6 billion in dividends.

Fannie’s Record Profit a Symbol of Housing Rebound

But the two mortgage giants appear to be on the rebound. For the fourth  quarter, Fannie Mae  reported another record high profit of $7.6 billion from October through  December. Fannie Mae  benefited from an improved housing market last year. It saw home prices go up,  while mortgage delinquencies declined.

The 2012 profit stands in sharp contrast to the company’s previous six years. Fannie Mae posted  cumulative losses of $146 billion between 2007 and 2010, capped by a nearly $72  billion loss in 2009, when the housing bubble burst. That’s a total of nearly $150 billion lost to bad loans over the last half  decade. But the government came to the rescue,  dishing out billions to save these two mortgage giants.

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