Back from the brink: Fannie Mae posts $2.7bn profit… its biggest since 2007

American mortgage giant Fannie Mae has reported profits of $2.7 billion - its largest since the housing bubble burst five years ago.

It is the company's first net income gain since it was taken over by the US government in 2008, in the grip of the country's worst housing crisis since the 1930s.

Fannie Mae said it would not need taxpayers' money to cover its first-quarter expenses for the first time in four years and forecast its 2012 financial performance would be even better.

On the up: Fannie Mae has posted its largest profits since the housing bubble burst in 2007

On the up: Fannie Mae has posted its largest profits since the housing bubble burst in 2007

Fannie announced profits of $2.7bn (£1.7bn) in the January-March quarter.

Instead of seeking more cash from taxpayers, the company will pay a dividend of $2.8bn to the Treasury Department.

That compares with the same quarter a year ago when Fannie reported a net loss of $6.5bn. 

The gain adds to growing evidence of an improvement in the American housing market since the crash in 2007.

January and February made up the best winter for US sales of previously occupied homes in five years.

And builders are laying plans to construct more homes in 2012 than at any other point in the past three and a half years.

Mortgage rates have never been cheaper in America and while home prices continue to fall, most US cities have reported smaller annual declines than in previous months. 

Fannie has received about $116bn so far from the Treasury Department; the most expensive bailout of a single company.

Of that colossal bail-out, Fannie has so far repaid about $23bn.

Bail-out: President Bush, pictured in 2008, calling on Congress to put into force legislation designed to prop up mortgage giants Fannie Mae and Freddie Mac

Bail-out: President Bush, pictured in 2008, calling on Congress to put into force legislation designed to prop up mortgage giants Fannie Mae and Freddie Mac

The US government rescued Fannie and sibling company Freddie Mac in September 2008 to cover losses on soured mortgage loans.

Since then, a federal regulator - the Federal Housing Finance Agency - has controlled its financial decisions. 

Taxpayers have spent roughly $170bn to rescue Fannie and Freddie.

It could cost roughly $260bn more to support the companies through 2014 after subtracting dividend payments, according to the US government. 

Last week, Freddie said it was requesting $19m in additional federal aid after posting a net loss attributable to common stockholders of $1.2bn for the January-March quarter.

That compared with a net loss of $929m in the same quarter of 2011. 

While it was the first time Fannie hasn't requested money since the crisis, Freddie has had four quarters when it did not seek government aid.

Freddie requested $19m for the January-March period, a relatively small request compared to previous quarters. 

Fannie and McLean, Virginia-based Freddie own or guarantee about half of all US mortgages, or nearly 31m home loans, which are worth more than $5 trillion.

Along with several federal agencies, they backed nearly 90% of new mortgages over the past year. 

Fannie and Freddie buy home loans from banks and other lenders, package them into bonds with a guarantee against default, and then sell them to investors around the world.

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