Friends often ask Fannie Mae Chief Financial Officer Susan McFarland when the government-sponsored enterprise is going to completely repay the bailouts.

Now that the GSE posted its first consecutive quarterly profit in five years, some are wondering if the agency can start paying down the bailouts faster. Actually, the conservatorship agreements the government-sponsored enterprises signed in 2008 keep them from doing so. In effect, Fannie and Freddie Mac are only allowed to make that 10% dividend payment on what became $188.4 billion in Treasury draws.

Profits in the first quarter roughly equaled what Fannie paid in dividend payments in March.

But, the GSE reported $5.1 billion in net income during the first quarter and made the dividend payment, which equaled $2.9 billion. And because conservatorship doesn't allow any more to be paid, what happens to the rest?

"The only payment we can make is the dividend payment. We can't pay down the principal," McFarland said in an interview with HousingWire Wednesday. "In this case, the $2.2 billion remaining after the payment sits and waits in a capital account. It kind of keeps rolling forward and creates a pool available to pay future dividend payments if we need."

It's a nice problem to have. The last time Fannie reported consecutive profits was the $1.9 billion in second quarter 2007, which followed a $967 million gain in the previous three months.

But back then, the outlook had already turned grim. In 2008, Fannie would go on to lose more than $58 billion as the housing market it and Freddie helped overheat disintegrated.

Now, the outlook is a bit brighter. Jim Vogel, analyst at FTN Financial, was even tempted to call the earnings this morning "robust." The key is home prices. According to its own index, values increased 2.9% in the first half of 2012, and if that stays positive for the rest of the year, it will be the first increase on the index since 2006.

"Fannie has more 'leveraged' exposure to home prices, allowing a bigger impact on the bottom line," Vogel said. "Net income would have easily topped $6 billion rather than the $5.1 billion actually reported if lower interest rates hadn't brought large GAAP derivative losses."

McFarland said home prices was the driver behind the earnings Wednesday, but like many who've seen the housing market show signs of rebounding before, spent much of Wednesday morning explaining the possibility that it may not last.

"While we were very pleased, we also recognize that the second quarter is usually the strongest home price wise," McFarland said. "We don't expect all of the improvement will sustain itself in the second half, but we did see a level of improvement that is more than expected."

As for when the bailouts will be paid back, it could take decades if it happens at all. More than $142 billion is still outstanding after June 30. For now, though, the market will take what the world's largest mortgage financier will give.

"For Fannie, the best possible world would be continued low and stable rates to reduce the drain from derivative mark-to-markets while supporting housing sales," Vogel says, then adds a drearier caveat to the good news Wednesday. "Twinned good quarters by the GSEs in conservatorship further reduce pressure in Washington to speed reform."