Fannie Mae
Summary
- Fannie Mae is a leading provider of mortgage financing in the U.S.
- Organized as a government-sponsored enterprise, Fannie Mae is a shareholder-owned corporation.
- The company's revenues are primarily driven by guaranty fees the company receive for assuming the credit risk on loans underlying the mortgage-backed securities the company issue.
Fannie Mae (OTC: FNMA, LSE: 0IL0) is a leading provider of mortgage financing in the U.S. The company purchase mortgages from lenders to free up the money they need to make other mortgage loans.
Recent Developments
Fannie Mae Prices Third Multifamily Connecticut Avenue Securities Deal1
November 20, 2023; Fannie Mae (FNMA/OTCQB) priced its third Multifamily Connecticut Avenue Securities® (MCAS™) transaction, MCAS Series 2023-01, a $595 million note offering. MCAS, Fannie Mae's issuance program designed to share credit risk on its multifamily conventional guaranty book of business, complements the successful risk sharing in its Delegated Underwriting and Servicing (DUS®) and Multifamily Credit Insurance Risk Transfer (MCIRT™) programs.
The reference pool for MCAS Series 2023-01 consists of 432 multifamily mortgage loans with an outstanding unpaid principal balance of approximately $24 billion. The reference pool includes multifamily loans underwritten according to Fannie Mae's standards and acquired by Fannie Mae from January 1, 2021, through December 31, 2022.
Financial Highlights
Third Quarter 20232
October 31, 2023; Fannie Mae reported its third quarter 2023 financial results and filed its Third Quarter 2023
Net revenues were relatively flat, with an increase of $67 million in the third quarter of 2023 compared with the third quarter of 2022.
Net income increased $2.3 billion for the third quarter of 2023 compared with the third quarter of 2022, driven primarily by a $3.2 billion shift to benefit for credit losses in the third quarter of 2023 from provision for credit losses in the third quarter of 2022 and a $503 million increase in fair value gains. The company's benefit for credit losses for the third quarter of 2023 was driven primarily by increases in actual and forecasted single-family home prices, partially offset by a provision relating to the redesignation of single-family loans from held for investment to held for sale. Fair value gains in the third quarter of 2023 were primarily due to increases in interest rates during the period. The increase in net income was partially offset by an increase in other expenses, net primarily due to $491 million of expense attributable to a jury verdict and an award of prejudgment interest for Fannie Mae preferred shareholders in two cases consolidated for trial in the U.S. District Court for the District of Columbia.
Net worth increased to $73.7 billion as of September 30, 2023 from $69.0 billion as of June 30, 2023. The increase is attributable to $4.7 billion of comprehensive income for the third quarter of 2023.
Company Overview
Fannie Mae is a leading source of financing for mortgages in the United States. Organized as a government-sponsored enterprise, Fannie Mae is a shareholder-owned corporation. Fannie Mae was chartered by Congress to provide liquidity and stability to the residential mortgage market and to promote access to mortgage credit. The company's revenues are primarily driven by guaranty fees the company receive for assuming the credit risk on loans underlying the mortgage-backed securities the company issue. The company do not originate mortgage loans or lend money directly to borrowers. Rather, the company work primarily with lenders who originate mortgage loans to borrowers.3
The company partner with mortgage lenders and servicers, housing counselors, real estate agents, nonprofit organizations, and other industry professionals to help people obtain a home and stay in that home when faced with hardship or disaster. 4
Single-Family
The company's Single-Family business helps homebuyers purchase and refinance homes. The company support mortgage lenders by acquiring the mortgage loans they originate. The company package loans the company acquire into mortgage-backed securities (MBS) that the company guarantee, attracting investors to the U.S. secondary mortgage market. The company's financing solutions enable lenders to offer 30-year, fixed-rate mortgages, which provide homeowners stable, predictable mortgage payments over the life of their loans.
The company develop and maintain underwriting and eligibility standards for Fannie Mae loans. Most of the single-family loans the company acquire are assessed by Desktop Underwriter® (DU®), its proprietary single-family automated underwriting system. The company also establish servicing standards, including borrower assistance options for homeowners experiencing financial distress.
Multifamily
The company's Multifamily business finances quality, affordable rental housing in every market, every day. The cornerstone of this business line is its Delegated Underwriting and Servicing (DUS®) program. DUS is a unique model that leverages private capital to finance multifamily housing. The company also invest in Low-Income Housing Tax Credit (LIHTC) properties to help create and preserve affordable multifamily housing. Like its work in the single-family housing market, Fannie Mae helps maintain the flow of capital in the multifamily market by securitizing loans into MBS, increasing the availability of funds for financing rental housing projects.
References
- ^ https://www.fanniemae.com/newsroom/fannie-mae-news/fannie-mae-prices-third-multifamily-connecticut-avenue-securities-deal
- ^ https://www.fanniemae.com/newsroom/fannie-mae-news/third-quarter-2023-financial-results
- ^ https://fintel.io/doc/sec-federal-national-mortgage-association-fannie-mae-310522-10k-2023-february-14-19402-3188
- ^ https://www.fanniemae.com/about-us/what-we-do
