Fannie Mae Reports Robust Third Quarter Income of $1.8 Billion

by Peter Thomas Ricci

November 09, 2012

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Fannie Mae not only reported a strong net income for 2012’s third quarter, but also that it’s anticipating an income for all of 2012, which hasn’t happened since 2006.

By Peter Ricci

Fresh off the positive financial news from Freddie Mac, sister GSE Fannie Mae is reporting great numbers of its own, with a third quarter net income of $1.8 billion.

That income was strong enough, Fannie reported, that it avoided drawing any funds from the Treasury for the third quarter, and it’s now so optimistic on its finances that it now estimates it will report a net income for 2012, which has not happened since 2006.

Healthy Housing Market Aids Fannie Mae’s Balances

As Fannie Mae’s full report explained, its finances have traversed quite the distance since 2011:

Fannie’s comprehensive income was $2.6 billion in 2012’s third quarter, whereas in 2011’s third quarter, it reported a comprehensive loss of $5.3 billion and a net loss of $5.1 billion.
Rising home prices were chiefly responsible for that changing scenario, Fannie reported.
Home prices increased 1.5 percent in 2012’s third quarter, compared to a 0.9 percent decline last year, and are now up 4.8 percent for the first nine months of 2012 (compared to a 1.7 percent decline in the same time period last year).
Also, and perhaps most significantly, Fannie’s book of business is the strongest its been in years. Single-family loans acquired since 2009 now make up 63 percent of Fannie’s books, and as of Sept. 30, 2012, its single-family serious delinquency rate is 3.41 percent, a 15 percent decline from a year ago.

Fannie’s National Housing Survey Equally Positive

Such positivity is also wearing off on U.S. consumers, if Fannie Mae’s latest National Housing Survey is any indicator.

Not only did 72 percent of the respondents say that now is a good time to buy real estate, but consumer attitudes on home prices have made marked strides in just the last year. Just 10 percent of respondents thought that home prices will fall in the next 12 months, a big fall from the 23 percent of consumers who reported similar feelings a year ago; also, 36 percent of consumers now think that prices will increase in the next year, which is up from 19 percent in 2011.