Fannie Mae Posts Big Profit

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Proclaiming a turnaround in the mortgage business, U.S. backed lender Fannie Mae reported net income of $17.2 billion on Tuesday, its largest annual profit in history.

After posting a net loss of $16.9 billion in 2011, the company attributed the turnaround to "improved credit results driven by a decline in serious delinquency rates, an increase in home prices, higher sales prices on Fannie Mae-owned properties, and the company's resolution agreements with Bank of America."

Fannie Mae was taken over by the federal government in the wake of the housing collapse and now returns profits to the government.

"We expect to remain profitable for the foreseeable future and return significant value to taxpayers," said Susan McFarland, executive vice president and chief financial officer.

In the fourth quarter Fannie Mae posted a $7.6 billion profit, compared to a net loss of $2.4 billion in the same quarter a year earlier and a $1.8 billion profit in the third quarter.

Fannie Mae's success underscores the rebound in the housing market, as it continues to record a decrease in loans in default. Earlier this year. Fannie Mae counterpart Freddie Mac reported $11 billion in profit for the year.

In the wake of the government takeover, both agencies faced criticism and their future was in doubt.

The improving performance of the companies "makes it very difficult to continue whipping up the political, political hostility" against the companies, Robert Bostrom, a former general counsel at Freddie Mac told the Wall Street Journal. "The intensity of the, 'We have to shoot them because they caused all this loss to the taxpayer'--that story becomes a little harder to sell."