Fannie Mae scores 2nd straight quarterly profit

Improving home prices helped US mortgage finance giant Fannie Mae to its second straight quarterly profit Wednesday after a 10-quarter loss streak. Fannie Mae reported a $5.17 billion net profit for the period to June 30, compared with a $2.9 billion loss a year earlier and up from $2.7 billion in earnings in the first quarter. After paying a $2.93 billion dividend on the government's preferred shares, earnings were $2.18 billion. Fannie Mae declared it needed no taxpayer funding for the second quarter. On Tuesday its sister mortgage firm Freddie Mac also reported second-quarter profits and no request for a capital injection from the US Treasury. Fannie Mae posted revenues of $5.8 billion in the second quarter, up from $5.2 billion a year earlier. The company said it had slashed its loan loss reserves to contribute to the profits surge as improved home prices helped push delinquencies lower. "Better market conditions and our actions to strengthen Fannie Mae's new business and limit losses from the company's legacy business contributed to positive second-quarter results," said chief executive Timothy Mayopoulos in a statement. "While it is too early to declare a national housing recovery, and our results for the second half of 2012 may not be as strong as the first half, we expect our financial results in 2012 to be substantially better than the past few years." Savaged during the financial and housing industry crisis of 2007-2008, the company was bailed out by the US government, which spent more than $180 billion saving it and Freddie Mac and put them under federal control.Together the two hold or guarantee around half of the mortgages in the United States. Fannie issues nearly half of all mortgage-related securities for single-family home loans. It said its ratio of serious loan delinquency on single-family mortgages fell to 3.53 percent, still high but down from 4.08 percent a year ago and well below the level for private mortgage lenders. Fannie Mae said it still faces a struggle to meet its obligation to pay the US Treasury $11.7 billion each year as a dividend on the nearly $120 billion in bailout funding it received from the Treasury. "Although we may experience period-to-period volatility in earnings and comprehensive income, we do not expect to generate net income or comprehensive income in excess of our annual dividend obligation to Treasury over the long term," it said.