May 18, 2021

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Mortgage News

Fannie/Freddie Income and Net Worth Increased in Q1

Both Fannie Mae and Freddie Mac reported improved income in the first quarter of 2021. According to Fannie Mae, net income rose to $ 4.99 from $ 4.57 billion in the fourth quarter of 2020, while Freddie Mac posted net income of $ 2.77 billion and total revenues of $ 2.38 billion recorded.

Fannie Mae said net sales were $ 6.829 billion, compared with $ 7.245 billion in the previous quarter, with interest income up $ 344 million and fee and other income up $ 72 million to $ 6.74 billion Dollars and $ 87 million. The decrease in interest income was due to lower prepayments for single family mortgages in the first quarter. The Company expects lower refinancing levels likely to result in fewer loan prepayments in the future and lower depreciation income over a period of time.

Offsetting lower interest income was a $ 1.66 billion increase in fair value from a deficit of $ (880) million in the fourth quarter. The increase was mainly due to the company’s introduction of hedge accounting in January 2021.

Fannie Mae’s net worth rose to $ 30.2 billion from $ 25.3 billion at the end of 2020. Changes to the Senior Preferred Stock Purchase Agreement (PSPA) between the GSEs restorer, the Federal Housing Finance Agency (FHFA) and the US Treasury Department now allow GSEs to build their net worth beyond the previously permitted level.

Fannie Mae reported $ 400 billion in conventional mortgage purchases during the period, down 6 percent from the previous quarter. The $ 26 billion decline was due to a seasonal decline in purchase mortgages, while refinancing volumes were flat from the previous quarter, although they were still at record levels. The company acquired 340,000 home loans and 1.1 million refinancing loans in the quarter. It also financed 217,000 rental apartments, 90 percent of which were affordable for families earning at or below 120 percent of the median income in their region.

At the end of March, 2.5 percent of the company’s post-lending single-family home ledger was indulgent, compared with 3.0 percent at the end of 2020. The serious crime rate for single-family homes went from 2.87 percent on December 31, 2020 to 2.87 percent back 2.58 percent at the end of the first quarter.

Freddie Mac’s total earnings were down $ 144 million from the previous quarter
but was $ 1.76 billion higher than a year earlier. Net income was $ 5.27 billion compared to $ 5.02 billion and $ 2.42 billion for the previous two periods. Net interest income of $ 3.64 billion decreased slightly year over yearth
however, rose $ 845 million year over year.

The company said the year-over-year earnings increases were mainly due to growth in the mortgage portfolio, higher prepaid expenses and faster loan prepayments due to the low interest rate environment.

The company financed 1.2 million single-family homes in the quarter, of which nearly 940,000 were refinancing loans. First-time buyers accounted for 46 percent of purchasing activity. In addition, more than 134,000 rental units were financed. Overall, Freddie Mac provided liquidity to the markets of $ 377 billion.

The company’s net assets at the end of the period were $ 18.8 billion, an increase of $ 2.4 billion from the fourth quarter of 2020. The company’s mortgage portfolio has an unpaid net present value of $ 2.9 trillion. Dollar.

At the end of the first quarter, 2.19 percent of the loans in Freddie Mac’s single-family portfolio were indulgent, as was 1.88 percent of the loans in the multi-family portfolio. The serious crime rate in the single-family portfolio fell from 2.64 at the end of December to 2.34 percent.