The second quarter of 2013 remained a profitable one for Fannie Mae and Freddie Mac, with the government-sponsored enterprises making a 180 degree-turn from their bailout days.

What a difference a year or two can make…

If you look at the Federal Housing Finance Agency’s second-quarter 2013 data, the GSEs are now cash cows, buoyed again in the second quarter by rising home prices and a new line of single-family business that boasts much higher credit quality.

The average FICO score for new single-family loans bought by Fannie came in at 756, while Freddie’s new business has an average FICO of 751. The two enterprises recorded a combined, second-quarter earnings of $15.1 billion, FHFA reported Thursday.   

In today’s economic climate, rising home prices have become a significant boon for Fannie and Freddie.

The FHFA noted that year-to-date through May 2013, national home prices shot up 4.3%. Compared to a year ago, national home prices are up 7.3%.

The FHFA added that, "Earnings also benefited from increased hedging income driven by increases in interest rates during the second quarter of 2013. Rate increases followed positive economic data including improvement in the housing market and the increasing possibility that the Federal Reserve may begin reducing asset purchases."

Of course, the Fed’s decision not to begin tapering its purchases of Treasurys and MBS, prompted market analysts to infer that rising rates may temper a bit, or even decline on the expectation that investors in MBS are getting some reprieve.

The benefits of falling delinquencies, rising home prices and improved credit quality have reduced the required loss reserves at both agencies.

"These factors resulted in a $9.3 billion decrease in the enterprises’ combined loan loss reserves during the second quarter of 2013,” FHFA reported. "The reduction in loan loss reserves led to the enterprises reporting a benefit for credit losses (i.e., a negative provision for credit losses) of $6 billion. This marks the third consecutive quarter that both enterprises reported a benefit for credit losses."