Freddie Mac and Fannie Mae posted gains for the second quarter and aren’t requesting any additional federal aid for the period.
Pablo Martinez Monsivais, Associated Press
Mortgage giants post big gains
- Article by: ANNIE LOWREY
- New York Times
- August 8, 2012 - 10:49 PM
WASHINGTON - In the latest sign that the worst might be over for the battered U.S. housing market, the two government-controlled mortgage finance giants, Fannie Mae and Freddie Mac, this week reported some of their best quarterly results since the real estate collapse.
On Wednesday, Fannie Mae posted second-quarter net income of $5.1 billion. That's up from $2.7 billion in the first quarter of this year and a giant improvement from a loss of $2.9 billion in the second quarter of last year. Fannie requested no additional money from the Treasury and said it would pay a $2.9 billion dividend to taxpayers.
On Tuesday, its brother organization, Freddie Mac, announced second-quarter net income of $3 billion, up from $577 million in the first quarter and a loss of $2.1 billion in the year-ago second quarter. It also requested no additional federal aid and said it would pay a $1.8 billion dividend to the federal government.
"We've have had two very good quarters," Timothy Mayopoulos, who became Fannie Mae's chief executive in June, said in an interview.
"In the longer term, we're encouraged by what we see, but it's going to be driven by factors that are bigger than we are," including unemployment and consumer confidence, Mayopoulos said.
Recovery at hand?
The mortgage giants have moved into the black as U.S. home prices have increased, delinquency rates have continued to fall and what analysts have cautiously described as a housing recovery has begun to take hold.
This week, CoreLogic, a real estate data firm, said home prices rose 2.5 percent in June compared with a year ago. There also has been a surge in refinancing, as homeowners have taken advantage of record-low interest rates.
"At the halfway point, 2012 is increasingly looking like the year that the residential housing market may have turned the corner," Anand Nallathambi, CoreLogic's president, said.
Both mortgage financiers said that loans made during the housing bubble -- loans on which homeowners were more likely to default -- were becoming smaller proportions of their portfolios.
Housing experts caution that the increase in home prices might not augur a housing turnaround -- and that further losses might still lie ahead for the Washington-based mortgage financiers. Though prices increased in June, home sales declined by 5.6 percent, the largest drop in 16 months, according to Capital Economics.
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