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Fannie Mae hot streak continues, net income increases slightly in Q3

Will pay $3 billion to U.S. Treasury

Mortgage giant Fannie Mae reported its third quarter net income today that’s slightly increased from the second quarter and from last year.

The government-sponsored enterprise posted profits every quarter for the last four and a half years and sees no near-term end to conservatorship. "Our senior preferred stock purchase agreement with Treasury also includes covenants that significantly restrict our business activities," the company said in its report.

The company reported a third-quarter net income of $3.2 billion and comprehensive income of $3 billion during the third quarter. This is up from last quarter’s net income of $2.9 billion and last year’s $1.9 billion.Because of this, the company will return $3 billion to the U.S. Treasury.

For comparison, Freddie Mac posted a net income increase to $2.3 billion in the third quarter, up from $993 million in the second quarter. The company will return $2.3 billion to the Treasury. 

The company attributed income increase in part to its new developments in the digital realm.

“Fannie Mae is delivering tools and technologies that reduce costs and increase efficiency for our customers,” Fannie Mae President and CEO Timothy J. Mayopoulos said. “We have partnered with lenders to develop new solutions that meet their most important needs.”

“We will continue to innovate so that we can help customers create a faster, safer and, ultimately, fully digitized mortgage experience for borrowers,” Mayopoulos said.

Net revenues also increased slightly to $5.6 billion, up from $5.5 billion last quarter but down from $5.8 billion last year.

Net fair value losses dropped significantly in the third quarter. In the second quarter the company posted $491 million in net fair value losses, compared to $1.7 billion last quarter and $2.6 billion last year.

The company’s credit-related income also saw a dip from $1.5 billion last quarter and $1.1 billion last year to just $563 million. Credit-related income in the third quarter of 2016 was driven by a benefit for credit losses during the quarter, which was due primarily to an increase in home prices, including distressed property valuations.

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