Fannie Mae profits grow to $4.3B in Q1 2024

Despite the struggles of its independent mortgage bank counterparties, Fannie Mae delivered $4.3 billion in net income during the first quarter of the year, up from $3.9 billion in the prior quarter, the government-sponsored enterprise (GSE) reported Tuesday.

The GSE’s net worth grew from $77.4 billion at the end of 2023 to $82 billion as of March 31. Its growth was “primarily drive by a shift to fair value gains and a shift to a benefit for credit losses, partially offset by a decrease in net interest income,” Fannie Mae explained in a statement that accompanied its financial results.

“The strength of the U.S. economy, higher single-family home prices, and the credit quality of our book of business continue to be important factors affecting our performance,” CEO Priscilla Almodovar said in prepared remarks, noting that Fannie Mae delivered a profit for a 25th consecutive quarter.

“This quarter, we provided $72 billion in liquidity to the U.S. housing market. This helped 280,000 households buy, refinance, or rent a home and reflects our strong commitment to managing risk and fulfilling our vital role supporting America’s housing finance system.”

The GSE remains profitable even at a time when higher mortgage rates have led to a precipitous drop in home sales and refinance opportunities.

It represents a contrast to many of its counterparties. Most independent mortgage banks haven’t turned a profit in about two years and many have complained bitterly about the spate of loan buyback requests by the GSEs.

At the height of the post-pandemic housing boom, Fannie Mae purchased $1.4 trillion in loans in both 2020 and 2021. The $72 billion in financing provided during the first three months of this year, however, puts Fannie on pace to finish below last year’s level of $369 billion in single-family and multifamily loan purchases.

The GSE acquired $62.3 billion in single-family conventional loans during the first three months of this year. That was 11% below the $70.1 billion it acquired in Q4 2023.

It acquired roughly 155,000 single-family purchase loans with an aggregate value of $53 billion in the first quarter, down from $61.7 billion in the prior quarter. More than 45% of these loans went to first-time homebuyers.

Refinance acquisition volume, however, increased from $8.4 billion to $9.3 billion.

Fannie’s single-family conventional guaranty book of business fell to $3.631 trillion at the end of March, down $6.9 billion from the end of December. This was driven by liquidation volume outpacing acquisition volume during the quarter.

The credit characteristics of its single-family portfolio included an average FICO score of 753 at origination. The weighted average mark-to-market loan-to-value ratio for these mortgages was 51%. And the portfolio’s serious delinquency rate (loans at least 90 days past due, including those in foreclosure) declined 4 basis points to 0.51% as of March 31.