* Credit losses fall to $3.5 bln from $4.5 bln
* Lower credit loses, rising home prices help results
* Fannie pays $2.9 bln dividend, does not tap Treasury
WASHINGTON, Nov 7 Fannie Mae, the
mortgage finance giant that has received billions in government
bailout money, on Wednesday said an improving housing market
helped it earn enough in the third quarter to avoid tapping more
Fannie Mae reported net income of $1.8 billion in the
July-September period, which would allow it to pay a dividend of
$2.9 billion to the government for its taxpayer-financed
bailout. The profit compares with a a loss of $5.1 billion a
It was the third straight quarter that Fannie Mae, which was
taken over by the government in September 2008, was able to pay
the dividend without drawing on government funds.
Fannie Mae has paid about $28.5 billion in dividends and
drawn about $116.1 billion from Treasury.
"We are seeing signs of sustained improvement in housing and
our actions to support the housing recovery have generated
strong financial results in 2012," Fannie Mae Chief Executive
and President Timothy Mayopoulos said in a statement.
Fannie Mae and its smaller rival Freddie Mac have
soaked up almost $190 billion in taxpayer funds since the
government seized them in 2008 at the height of the financial
Both companies have stopped relying on government aid to
stay afloat recently, after years of cash injections, as rising
home prices help limit cash losses on homes that fall into
The strong performance in the third quarter was boosted by
lower credit losses, which fell to $3.5 billion from $4.5
billion a year earlier, and rising home prices.
Aside from an increase in home values, both Fannie Mae and
Freddie Mac, which buy home loans from lenders and repackage
them as securities for investors, have noted improvements in the
performance of loans they purchase and guarantee.
"We continue to see home prices improve again in the third
quarter, albeit not nearly at the level they did in the second
quarter. That is the single biggest driver in the results,"
Susan McFarland, chief financial officer, said in an interview.
"We've got to continue to work through the delinquent book of
loans," she added.
On Tuesday, Freddie Mac reported a $2.9 billion
third-quarter profit compared with a year-earlier loss of $4.4
billion. The company said it was making a $1.8 billion dividend
payment to the Treasury and did not seek any new aid.
Freddie has now given back $21.9 billion in cash dividends,
or 31 percent of the total amount it has drawn from the
government, and requested $71.3 billion in taxpayer funds.
Starting next year, the two companies will be required to
turn over all their profits to the Treasury as a dividend
payment and shrink their investment portfolios more quickly.
Previously, the two companies were required to pay a 10
percent dividend payment to the Treasury on senior preferred
shares, whether or not they made money. At times, that meant
they had to draw money from the government just to make the
"What we're focused on is doing what we can do to stabilize
the housing market today and to build a better housing finance
system for the future," McFarland said. "We let the politics,
let the administration work through what they think the right
construct should be in the future."