WASHINGTON-Both Fannie Mae and Freddie Mac last week reported strong profits for the second quarter of 2012, indicating the worst of the real estate crisis may be over.
The quarterly profits by the two mortgage giants comes as good news for credit unions, which depend on Fannie and Freddie to buy an estimated half of all single family mortgage originated at credit unions.
Freddie Mac reported a $1.2-billion second quarter profit last week, meaning the housing giant will not require government bailout funds this quarter for the first time since its 2008 federal takeover. The second quarter profit compares to a $3.8-billion loss for the same period last year and a $1.2 -billion loss for the first quarter this year, necessitating an additional $19 million in government bailout funds. At the end of May, Freddie had received $72 billion in bailout funds since the 2008 takeover. The second quarter profit came even after Freddie paid the government a $1.8-billion dividend on the preferred stock it owns in the company.
The Freddie Mac and Fannie Mae profits comes as good news for credit unions, which depend on Freddie and its sister mortgage agency Fannie Mae to buy an estimated half of all single-family mortgages originated at credit unions.
Freddie said its credit-loss provisions for the latest period were $155 million, down from $2.5 billion a year earlier and $1.8 billion in the first quarter. Freddie's single-family delinquency rate was 3.45% compared with 3.5% both a year earlier and in Q1. The company posted $882 million worth of derivatives losses for the quarter versus $3.81 billion a year ago. It also recorded a $1-million loss related to the extinguishment of debt, down from a $125 million loss last year.
Fannie Mae, meanwhile, reported a $2.2-billion second quarter net, even after Fannie paid a dividend of $2.9 billion to the Treasury Department and sought no additional aid.
"We think home prices have stabilized," Fannie President Timothy Mayopoulos said.
Signficant Bailout Funds Still To Be Repaid
Fannie has reported gains in net income in both quarters this year. It earned $2.7 billion in the January-March quarter and paid a dividend of $2.8 billion to the Treasury.
The company received about $116 billion from the Treasury Department, the most expensive bailout of a single company. It has so far repaid about $26 billion.
Freddie Mac and Fannie Mae have received almost $175 billion in bailout funds since the 2008 takeover by the federal government.