Fannie Mae suffered a serious income decline for the third quarter of 2021, it slid down to $4.8 billion from $7.2 billion from Q2 to Q3.
The mortgage giant said the decline was majorly driven by a drop in credit-related income and lower net interest income.
In the third quarter, Fannie Mae’s overall net worth grew to $42.2 billion.
Hugh Frater CEO at Fannie Mae claims that in spite of the fall it was a strong quarter for them as they continue to build capital.
But they remain “significantly undercapitalized” in the third quarter admitted Fannie Mae in its release.
Frater added, though rising home prices are good for homeowners and sellers it has negatively impacted the affordability for many first-time homebuyers along with lower- and middle-income families, making it unaffordable for them leading to inequity in the housing economy.
They aim to continue working with FHFA and provide affordable homeownership and quality rental housing for Americans.
In Q3 their single-family acquisitions fell to $296.4 billion from $373.3 billion in Q2.
Similarly, this quarter the purchase acquisitions also dropped to $115.4 billion from $129.5 billion, of which nearly half were for first-time homebuyers. in the third quarter, Fannie’s refinance acquisitions also declined.
The GSEs average single-family conventional guaranty book of business rose by 2.3% this quarter.
https://www.compareclosing.com/mortgagenews/fannie-maes-earning-dropped-this-quarter/
Fannie and Freddie’s shares, which are down more than 40% in the past week after the Supreme Court’s ruling last week that the president can readily replace the head regulatorA new chief overseer can now be appointed by the Biden administration because of the holdover from the Trump administration, who was seeking to release the companies from government conservatorship during his term.So these government-sponsored enterprises are getting prepared to attract private investors to raise their capital requirements, yet boosting their returns.To many, it means higher fees and tighter access to guarantees because the fees bump last year sent mortgage originators’ shares down sharply.With an aim to make mortgages cheaper and more widely available the GSEs’ regulator under President Biden, may try to cancel some of the earlier measures, or put other initiatives.By cutting fees, or expanding the types of borrowers or loans they back, GSE’s could increase the market size for the firms that originate many qualified mortgages.Supporters of the prior administration’s approach might say that by discouraging the growth of other types of mortgages the GSEs in their current state distorted the market.Some big banks, too, have seen their share of the mortgage business go up with a smaller footprint for government-guaranteed loans, but they also benefit from unloading the credit risk.KBW analyst Bose George said additional credit protection on GSE guarantees was offered by mortgage insurers.He felt they might benefit if the Biden administration can help homeowners break off default, even though credit risk is already alleviated by the economic recovery.When more volume flows through the system it would be a boost to insurers.Even though President Biden’s full plans for the entities are unclear yet but reorienting Fannie and Freddie’s policy to make their services cheaper or broader would benefit many stocks in the mortgage sector.Reference Source: WSJhttps://www.compareclosing.com/mortgagenews/fannie-and-freddie-policies-to-be-reoriented-to-make-them-cheaper/
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