Nov. 7 (Bloomberg) -- Fannie Mae said it won’t seek U.S. Treasury Department aid for a third straight quarter and expects to post its first annual profit since 2006 as the housing market’s recovery helps bolster financial results.
The company had third-quarter net income of $1.8 billion after a $2.9 billion dividend payment to the Treasury on the government’s stake, largely because of rising home prices, Washington-based Fannie Mae said today in a statement. The profit compared with a $5.1 billion loss in the same period a year earlier.
“The most significant driver is the improvement in home prices, and then we’ve had a number of other positive things that have added to it, like declining delinquencies” and better sales execution on foreclosed homes owned by the company, Susan McFarland, Fannie Mae’s chief financial officer, said in a telephone interview. “When you look across the board, virtually all of the different parts of our financial statements have been improving.”
Fannie Mae and Freddie Mac have required almost $190 billion in aid since they were seized by federal regulators and placed under U.S. conservatorship in 2008 amid losses that pushed them toward insolvency. The two government-sponsored enterprises, which provide liquidity by buying and bundling mortgages, own or guarantee more than half of U.S. home loans.
Freddie Mac, based in McLean, Virginia, said yesterday it wouldn’t need a Treasury draw for the second quarter in a row as it reported third-quarter net income of $2.9 billion after accounting for a $1.8 billion dividend payment to Treasury.
Starting next year, the two taxpayer-owned companies will cease paying dividends of 10 percent to the Treasury and will instead pay any profits above a permitted capital reserve.
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