Fannie Mae net income fell 1.2% in 3Q as net worth climbed

Net worth now $10.3 billion as it begins to rebuild capital

Fannie Mae, the largest issuer of single-family mortgage bonds, saw its net income fall 1.2% in the third quarter from a year ago.

Its net worth now stands at $10.3 billion after the September agreement between its watchdog, the Federal Housing Finance Agency, and the Treasury, allowed it to begin rebuilding capital.

Net income fell to $3.96 billion from $4.01 billion in the year-ago quarter, the government-controlled mortgage financier said on Thursday. Net interest income fell to $5.23 billion from $5.37 billion while income from fees rose to $402 million from $271 million.

Fannie Mae’s single-family segment reported net income of $3.32 billion, down from $3.46 billion in the year-ago quarter. Net interest income fell to $4.48 billion from $4.67 billion while “fee and other income” rose to $156 million from $79 million in the same period.

Fannie Mae’s multifamily segment saw net income rise to $640 million from $549 million. Net interest income rose to $745 million from $699 million as “fee and other income” rose to $246 million from $192 million.

Fannie Mae backed 39% of the single-family mortgages originated in the third quarter, the company estimated.

“Fannie Mae has financed approximately 1 in 4 single-family mortgage loans outstanding in the United States,” the company said in a statement.

Treasury and the FHFA agreed to increase the amount of capital Fannie Mae is permitted to retain to $25 billion, allowing it to begin restoring its capital base with an eye to releasing it from conservatorship.

The mortgage giant’s current net worth, $10.3 billion, compares with $6.2 billion at the end of 2018.

Fannie Mae was once numbered among the most powerful companies in the U.S., with a stock price that traded north of $80 a share. After it was seized by the federal government in 2008, those same shares began trading for pennies. Yesterday, the shares closed at $3.14.

Treasury issued a so-called blueprint on Sept. 5, on the eve of the 11th anniversary of its seizure, to release Fannie Mae and Freddie Mac from government conservatorship.

On Sept. 30, FHFA and Treasury announced an agreement that would allow the so-called government-sponsored enterprises to retain a combined $45 billion in capital as they prepare to become independent companies again.

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