Fannie Mae reports income gain for first time since 2008

Mortgage giant Fannie Mae won't need federal assistance for the first quarter after reporting its first net income gain since the government took over the firm in September 2008.

Fannie Mae reported a net income of $2.7 billion through the first three months of the year, compared with a net loss of $6.5 billion during the first quarter of 2011 and a net loss of $2.4 billion in the fourth quarter of last year. 

The company’s comprehensive income of $3.1 billion was enough to pay the first-quarter dividend of $2.8 billion to the Treasury Department.

The improvement in the company’s financial results was due primarily to lower credit-related expenses from a slower decline in home prices, a drop in the company’s inventory of single-family real-estate-owned (REO) properties along with improved REO sales prices and lower serious delinquency rates on single-family loans, as the housing market shows signs of recovery. 

"Today’s results exemplify the tremendous progress we have made since 2009,” said Michael Williams, president and chief executive officer. “Our financial performance has improved significantly and we successfully limited losses on the legacy book of business through our efforts to help homeowners avoid foreclosure."

Taxpayers have shelled out $116 billion to keep Fannie afloat through the housing and broader financial crisis.

Lawmakers and the Obama administration continue to examine ways to help homeowners avoid foreclosure, thus reducing the burden on the books of Fannie and its companion lender, Freddie Mac.  

Freddie announced last week that it needed another $19 million in federal assistance after posting a net loss of $1.2 billion for the first quarter, compared with a net loss of $929 million in the same quarter of 2011.

Freddie has accepted more than $72 billion in federal aid — bringing the total for the two firms, which guarantee $5 trillion in home loans — to more than $188 billion.