After reporting it will need billions of dollars from the Treasury, as fully explained here, the CEO of Fannie Mae predicted the government-sponsored enterprise will return to profit for the full year 2018.
“We had a solid quarter in that our business performance was excellent,” Timothy Mayopoulos told HousingWire by phone this morning. “The quarter’s earning are not a reflection of our underlying business. We will also benefit from the lower corporate tax rate.”
So, how is that underlying business performing?
According to recent analysis by DBRS: At Fannie Mae, FICO scores are trending downward over time, DTIs increased slightly and LTV ratios remained relatively stable. The similarities in loan characteristics resulted in comparable delinquencies, disaster-affected areas aside, Mayopoulos adds.
“For the actual loss pools, cumulative net losses are at or close to 0% because the definition of credit event net loss excludes any mortgages 180+ days delinquent and the loans in these deals are not seasoned enough to experience certain credit events,” DBRS wrote in its recent, special report that reviews the U.S. housing market and the residential mortgage-backed securities.
“We do expect to be profitable in 2018,” Mayopoulos added, saying that Fannie Mae remains dedicated to their true customer; that is mortgage originators and investors.
“We are a b2b business, we’re not a b2c business,” he said.