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Fannie Mae’s net worth doubles to $47B

Fannie Mae's share of loans acquired for first-time homebuyers rose to 16% in 2021

Fannie Mae reported its overall net income increased in 2021 to $22.2 billion, an increase of $10.4 billion compared to 2020, largely due to the growth of its single-family business.

Net revenue increased $4.6 billion to $29.9 billion in 2021, mostly driven by higher guaranty fee income, including that generated by the 50 basis point adverse market fee on most agency refinances. That fee was in place for half the year, from December 2020 to July 2021, when the Federal Housing Finance Agency under Acting Director Sandra Thompson eliminated it.

Of the company’s receipts, single-family by far represents the biggest share. Single-family net revenue rose to $25.7 billion in 2021 from $21.9 the year prior, but growth in earnings from the segment rose much more steeply, more than doubling year-over-year. Fannie Mae reported single-family net income of $19.1 billion in 2021, compared with $9.9 billion in 2020 and $11.9 billion in 2019.

Fannie Mae’s net worth now stands at $47.4 billion, an increase of $22.1 billion from 2020.

Fannie Mae’s charter requires it to promote access to credit, including in underserved areas. It also allows Fannie Mae to make lower returns on financing mortgages for low- and moderate-income families.

Thompson has already sharpened the focus on affordability in her tenure as acting director of Fannie Mae and Freddie Mac’s conservator. Fannie Mae CEO Hugh Frater reflected that focus on affordability in his prepared remarks, saying that many parts of the housing economy performed well in 2021, but “not for everyone.”

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“Our housing mission to advance equitable and sustainable access to homeownership and quality, affordable rental housing has never been more important,” Frater said. “Much work remains to ensure that America’s housing finance system serves all people fairly and is safe, sound, and properly capitalized.”

In 2021, 69% of single-family loans backed by Fannie Mae had credit scores higher than 740, and the average loan amount rose to $281,530 from $279,800 in 2020. Fannie Mae reported that 16% of its single-family loan acquisitions were for first-time homebuyers, up from 13% in 2020.

Fannie Mae continues to operate under conservatorship, which means that a turnover in political administration can spell changes to how it does business.

During 2021, FHFA suspended several elements of the scorecard — how it sets annual priorities and expectations for the GSEs — which had been set by the FHFA under the previous administration. Fannie Mae reported that the FHFA suspended plans to crafting a roadmap toward the end of conservatorship, carry out housing market reform and ensure efficient utilization of capital.

FHFA also directed Fannie Mae to halt efforts to reduce its risk and complexity “to levels more appropriate for regulated entities with limited capital cushions.”

In its 300-plus page annual report, Fannie Mae also gave an update on the status of its proposed Duty to Serve underserved markets plan for 2022 to 2024, which FHFA rejected earlier this year. Fannie Mae said it has now revised and submitted the draft plans “for further FHFA consideration.”

The share of loans with borrowers that are behind on payments has also dwindled during 2021. The GSE reports loans receiving COVID-19-related payment forbearance as delinquent according to the contractual terms of the loan. By the end of 2021, Fannie Mae’s seriously delinquent rate had fallen to 1.25%, from a high of 2.87% in 2020. Before the pandemic, the seriously delinquent rate was 0.66%.

Fannie Mae in recent years has seen an exodus of executive-level employees, and in June 2021 the FHFA published a request for input on executive compensation.

But the company also shed 300 full-time employees during 2021. Fannie Mae’s annual report notes that 39% of its 7,400 employees have tech-related jobs and “competition is especially high for employees with technology skills.”

“An improving economy and increased remote work opportunities have increased the competition we face from other companies in hiring new employees, as well as in retaining our employees.”

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