Latest Fannie Mae payment to Treasury nearly evens out
CEO: Guarantee fee rise to continue
Fannie Mae’s third-quarter net income continued to lift higher and hit $8.7 billion, compared to $1.8 billion for the third quarter 2012, marking its seventh consecutive quarterly profit.
By December 2013, Fannie will have paid an aggregate of approximately $114 billion in dividends to Treasury. It received $116 billion from taxpayers.
In addition, so far, Fannie Mae has funded the mortgage market with approximately $3.9 trillion in liquidity since 2009.
The strong earnings were driven primarily by continued stable revenues, credit related income due to an increase in home prices, recognition of compensatory fees from an agreement we reached with Bank of America and a decline in the number of delinquent loans in our single-family book business, Tim Mayopoulos, Fannie Mae president and CEO, said.
Looking ahead, the government-sponsored enterprises are projected to undergo reform in five years, with various proposals on how to wind them down.
In result, Mayopoulos explained guarantee fees are sufficient to cover its risks. However, g-fees have continued to rise to prepare the market for a scenario that is likely to happen, where GSEs will have to carry a higher level of capital to meet the requirements of the private sector, Fannie Mae CEO said.
“While the company expects its annual earnings to remain strong over the next few years, its earnings may vary significantly from quarter to quarter and year to year due to many different factors, such as changes in interest rates or home prices,” the company noted.
“We are not predicating that level of home prices to continue in the future, which might make our earnings moderate,” Mayopoulos added.