Fannie Mae has reported third-quarter earnings of $4 billion, an 11% decrease quarterly, but a 2.5% increase annually. The $440 million quarterly drop in net income was primarily driven by a decrease in fair value gains and a decrease in benefit for credit losses, according to the press release announcing third-quarter results.
Fair value gains amounted to $52 million in the third quarter, compared with $447 million in the second quarter, the decline attributable to falling interest rates during the quarter. Benefit for credit losses was $27 million in the third quarter, compared to $300 million the previous quarter.
Fannie Mae’s net interest income remained relatively flat from the second quarter to the third.
In the earnings release, Fannie Mae President and CEO, Priscilla Almodovar, noted the government-sponsored enterprise’s (GSE) twenty-seventh quarter of consecutive, positive results “demonstrates our continued progress in transforming our business and strengthening our balance sheet, so that we fulfill our mission in any economic environment.”
Freddie Mac also reported third-quarter earnings this week, notching a 10% quarterly increase in net income to $3.1 billion. Net revenues of $5.8 billion were down slightly from the second quarter’s $6 billion, but represent an increase of 3% annually.
In its single-family residential business specifically, Fannie Mae reported conventional acquisition volume of $93.1 billion in the third quarter, compared with $85.9 billion in the second quarter. Half of Fannie Mae’s purchase acquisition was for first-time homebuyers, who comprise an ever-increasing share of new purchase demand, given persistent lock-in effects.
Purchase acquisition volume increased to $80 billion in the third quarter from $74.5 billion in the second quarter. Meanwhile, refinance acquisition volume was $13.1 billion in the third quarter, an increase from $11.4 billion in the second quarter.
The benefit for credit losses in the third quarter reflects a $451 million single-family benefit for credit losses, mostly offset by a $424 million multifamily provision for credit losses. Single-family benefit for credit losses in the third quarter was primarily driven by a benefit from forecasted home price growth and a benefit from actual and projected interest rates.
The average charged guaranty fee, net of TCCA fees, on the single-family conventional guaranty book remained mostly flat in the third quarter at 47.7 basis points (47.6 basis points in the second quarter). The average charged guaranty fee on newly acquired single-family conventional loans, net of TCCA fees, increased 4.2% in the third quarter to 54.1 basis points, from 51.9 basis points in the second quarter.
At the annual conference of the Mortgage Bankers Association (MBA) which culminated this week in Denver, both Fannie and Freddie made bold announcements aimed at expanding appraisal waivers and transparency initiatives, in addition to announcing the expansion of a performing-loan repurchase pilot to all lenders beginning in the first quarter of 2025.
