November 28, 2021
  • November 28, 2021

Fannie Mae lifted by low rates, buys second quarter mortgages

By on August 3, 2021 0

Fannie Mae continues to reap the rewards of low mortgage rates with net income of $ 7.2 billion in the second quarter of 2021, up from $ 5 billion in the first quarter.

Refinances continued to represent the majority of the government sponsored entity’s acquisitions. In the second quarter, refinances accounted for 65%, or $ 243.8 billion, of Fannie Mae’s $ 373.3 billion of single-family home acquisitions, while refinances represented 70% or $ 545 billion of its acquisitions. of detached houses during the year so far.

But unlike last year, acquisitions reached $ 130 billion, surpassing each of the previous four quarters. Half of these acquisitions were made by first-time buyers, reported Fannie Mae.

The moratorium on foreclosures ended at the end of July, although borrowers have the option of reducing their monthly payments. Fannie Mae reported that at the end of June, of the 1.4 million loans with COVID-19 forbearance, 24% have been reinstated, 24% have deferred payments, 24% have been repaid and 23% remain in active forbearance. .

Including forbearance loans, 2.08% of Fannie Mae’s single-family loans are severely past due, down fifty basis points from the first quarter of 2021.

Appeal executives said the company remains undercapitalized, although Fannie Mae’s net worth reached $ 37.3 billion in the second quarter. Its net worth to assets ratio also increased, from 0.7% in the first quarter to 0.9% in the second quarter.

The company also continues to suspend credit risk transfers. In March 2020, Fannie Mae and Freddie mac pause on credit risk transfers, which shift some of the risk of credit losses on the mortgages they insure onto investors. Freddie Mac resumed these transfers by the end of 2020, but Fannie Mae has not completed any new credit risk transfer transactions since.

As a result, the share of its collateral portfolio covered by CRT fell to 21% in the second quarter of 2021. In 2019, the last full year it engaged in CRT transactions, the risk mitigation strategy covered 46% of its portfolio.

David Benson, acting chairman and chief financial officer of Fannie Mae, said Fannie Mae expects refinancing to decline in the second half of the year, due to an “expected modest rise in interest rates.”

During the quarterly earnings call, Fannie Mae CEO Hugh Frater said beyond Fannie Mae’s numbers and the economy rebounding, housing is still not affordable for many.

“We recognize that the housing market we serve does not meet everyone’s needs,” said Frater. “We need to change that. Both big and small actions are needed to move housing forward in the right direction.”

Hugh also noted that Fannie Mae agrees with statements Housing and urban development Secretary Marcia Fudge and Federal Housing Finance Agency Acting director Sandra Thompson did so, expressing their commitment to making the housing system more equitable.

The company also said that in light of the uncertainty surrounding the pandemic, it would consider a hybrid work-from-home model for its employees. A large majority of its employees work remotely, he said, although it now allows employees to work from main offices on a voluntary basis.

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