Fannie Mae earned high enough profits to avoid drawing further bailouts from the Treasury Department or the second quarter in a row.

The government-sponsored enterprise earned $5.1 billion in the second quarter, up from a $2.9 billion loss one year ago. The gains follow a $2.7 billion profit in the first three months of 2012.

Fannie paid back $2.9 billion to the Treasury in the second quarter. The GSE still must pay back more than $96 billion in bailouts taken since 2008.

Like its brother Freddie Mac, Fannie benefitted from recovering home prices in the second quarter. The 2.9% increase in prices so far in 2012 is the first rise on Fannie's index since 2006 and allowed it to take fewer losses on its mortgage bond holdings, reduced its cost of REO and continued the decline of its serious delinquency rate to 3.53%.

Fannie also lowered its loss reserves to $68 billion from nearly $77 billion held at the end of last year.

The agency remains the largest mortgage financier in the world. It purchased or guaranteed roughly $416 billion in new mortgages during the first half of the year, up from just over $300 billion over the same period last year.

"While it is too early to declare a national housing recovery, and our results for the second half of 2012 may not be as strong as the first half, we expect our financial results in 2012 to be substantially better than the past few years," said new CEO Timothy Mayopoulos.

jprior@housingwire.com

@JonAPrior