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With $2.7B Profit, Fannie Mae Ends Q1 Without Drawing Taxpayer Funds

""Fannie Mae"":http://www.fanniemae.com said Wednesday that it brought in $2.7 billion dollars in net income during the first quarter of this year, and for the first time since it was seized by the government in September of 2008, the company does not need a draw of taxpayer funds from Treasury to get out of the red.


The GSE is standing on her own, with a net worth of $268 million, even after making a first-quarter dividend payment of $2.8 billion to the U.S. Treasury on senior stock the government holds as the company's conservator and primary shareholder.

Fannie’s tab with taxpayers totals $117.1 billion. To date, the GSE has paid in $22.6 billion to cover shareholder dividends.

Fannie Mae's profitable first quarter compares to a net loss of $2.4 billion reported for the previous quarter and a net loss of $6.5 billion during the first quarter of last year.

The nation's largest mortgage financier says ""the significant improvement"" in its financial results can be traced to lower credit-related expenses as the decline in home prices slowed over the last quarter and the company shed some of its REO holdings at a time when REO sales prices began to improve.

Credit-related expenses, including credit loss provisions and expenses related to foreclosed properties, were $2.3 billion in the first quarter of 2012, down from $5.5 billion in the fourth quarter of 2011 and $11.0 billion in the first quarter of 2011.


Fannie Mae’s financial timeline traces the lines of a slow and steady recovery. Credit-related expenses decreased by nearly two-thirds between January 2009 and March 2012, while loss reserves are expected to have peaked at the end of 2011.

The GSE’s total loss reserves, which reflect its estimate of the probable losses the company has incurred on loans in its guaranty book of business, decreased to $74.6 billion as of March 31, 2012 from $76.9 billion as of December 31, 2011.

Fannie officials say they expect current loss reserves to cover future credit losses on the pre-2009 legacy book of business have reached their peak.

The company’s single-family serious delinquency rate has declined for eight consecutive quarters, since the first quarter of 2010. It stood at 3.67 percent as of the end of March 2012, compared to 5.47 percent as of March 2010.

Fannie Mae completed 77,748 loan workouts for distressed homeowners over the first three months of this year. Approximately 46,671 were loan modifications, 8,864 were repayment and forbearance plans, and 22,213 were short sales.

The company’s single-family foreclosure rate was 1.07 percent in the first quarter of 2012, compared to 1.13 percent in 2011. This reflects the annualized number of properties foreclosed as a percentage of Fannie’s total guaranty book of business.

The GSE acquired 47,700 single-family REO properties in the first quarter of 2012, but disposed of 52,071. As of March 31, the company held 114,157 single-family REOs in its inventory. The carrying value of these properties is figured at $9.7 billion.

Fannie Mae issued $6.6 billion in loan repurchase requests during the first quarter. The company collected or resolved $4.5 billion in earlier requests and canceled $337 million. As of the end of the first quarter, Fannie’s outstanding requests for loan buybacks stood at $12.15 billion.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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