The Fannie Mae headquarters in Washington, D.C.
Mortgage giant Fannie Mae avoided having to ask the Treasury department for another handout after financial results released Wednesday showed a better financial outlook for the government-sponsored enterprise.
It's the first time since Fannie Mae entered conservatorship in 2008 that the company hasn't needed a quarterly financial pick-me-up from the government. The agency has received $116 billion in aid from the Treasury Department thus far and a total of $170 billion in taxpayer funds overall, the costliest bailout of the financial crisis.
Fannie Mae reported $2.7 billion in net income for the first quarter of 2012, up from a $6.5 billion loss during the first quarter of 2011 and a $2.4 billion loss in the fourth quarter of 2011. The company's comprehensive income of $3.1 billion covers its required $2.8 billion payment to the Treasury.
The improvement in the company's balance sheet was due primarily to less extreme home price declines, fewer single-family homes on their books, and fewer agency-backed mortgages in serious delinquency.
"We expect our financial results for 2012 to be significantly better than 2011," said Susan McFarland, executive vice president and chief financial officer, in a statement. "As our serious delinquency rate declines and home prices stabilize, we expect to reduce our reserves, which combined with revenue from our high-quality new book of business, will drive our future results."
But while Fannie Mae seems to be patching up its balance sheet, its sibling agency Freddie Mac reported another loss last week, according to the Associated Press, requesting $19 million in aid for the first quarter. On the bright side, Freddie Mac's request is relatively small to their shortfall a year ago when they reported a net loss of almost $930 billion.
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Fannie Mae's positive financial report is the latest sign that the battered housing market could finally be seeing the light at the end of the tunnel, especially as Fannie Mae continues to acquire higher quality loans.
Still, some projections put the future price tag on propping up Fannie and Freddie at more than $260 billion through 2016.
Meg Handley is a business reporter for U.S. News & World Report. You can reach her at mhandley@usnews.com and follow her on Twitter.
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Kate of VA 3:50PM May 13, 2012