The Federal National Mortgage Association, or Fannie Mae, ended last year with a strong fourth quarter and saw its net worth nearly double for all of 2021, according to earnings results reported today.
For the fourth quarter of 2021, Fannie Mae reported net income of $5.2 billion, up 7% from the previous quarter. Net revenues in the quarter totaled $7.7 billion, an 8% increase from the third quarter, driven primarily by a 72% increase in net investment gains and a 19% increase in net interest income.
Net interest income increased $4.7 billion in 2021 compared with 2020, driven primarily by higher base guaranty fee income and higher amortization income, Fannie Mae said. The company’s base guaranty fee income grew as a result of growth in its guaranty book of business to $3.9 trillion in 2021, up from $3.6 trillion in 2020, coupled with an increase in the company’s average charged guaranty fee.
In addition, single-family refinances of $903.7 billion in 2021 drove significant prepayment activity, resulting in elevated amortization income during the year. Single-family mortgage loan prepayment activity slowed in the later part of 2021, but refinancing activity remained strong throughout most of 2021 due to the continued low interest-rate environment.
For the full year, Fannie Mae reported net income of $22.2 billion, an 88% increase from $11.8 billion for all of 2020. Fannie Mae said the increase was driven primarily by a shift from credit-related expense to credit-related income, higher net interest income, and a shift from fair value losses to fair value gains.
Credit-related income was $5.1 billion in 2021, compared with credit-related expense of $855 million in 2020, Fannie Mae said. Credit-related income in 2021 was driven primarily by strong actual and forecasted home-price growth; an increase in the volume of loan redesignations, and a reduction in the company’s estimate of losses it expects to incur as a result of the COVID-19 pandemic, partially offset by increases in interest rates.
The enterprise saw its net worth in 2021 increase to $47.4 billion, up 87% from $25.3 billion a year earlier.
CEO Hugh R. Frater said Fannie Mae continued to be a “crucial source” of mortgage financing in 2021.
“Our performance was strong and many parts of the housing economy performed well in 2021, but not for everyone,” Frater said. “Our housing mission to advance equitable and sustainable access to homeownership and quality, affordable rental housing has never been more important. Much work remains to ensure that America’s housing finance system serves all people fairly and is safe, sound, and properly capitalized.”
For all of 2021, Fannie Mae also:
- Provided $1.4 trillion in liquidity to the Single-Family and Multifamily mortgage markets in 2021.
- Made $451.3 billion of Single-Family home purchase acquisitions in 2021, the highest on record and of which nearly 50% were for first-time homebuyers.
- Acquired 1.5 million home purchase loans and 3.3 million refinance loans during 2021, helping homeowners take advantage of low interest rates.
- Financed approximately 694,000 units of rental housing, nearly 95% of which were affordable to families earning at or below 120% of area median income, providing support for both workforce and affordable housing.
- Initiated more than 1.4 million single-family forbearance plans to help borrowers since the onset of the COVID-19 pandemic; as of Dec. 31, 2021, approximately 1.3 million of these loans have exited forbearance, including approximately 788,000 through reinstatement or payoff and approximately 380,000 through the company’s payment deferral option.
Fannie Mae also noted that home-price growth in 2021 was 19%, the highest annual rate in the history of its home price index.
To view the full earnings report, visit www.fanniemae.com.
