Fannie Mae reported net interest income of $5.4 billion in the third-quarter derived primarily from guaranty fees on its $3.3 trillion portfolio.
In fact, more than 75 percent of Fannie Mae’s net interest income in the third quarter of 2018 was derived from the loans underlying Fannie Mae mortgage backed securities in consolidated trusts, which primarily generate income through guaranty fees. Fannie Mae’s net income of $4.0 billion for the third quarter of 2018 compares to net income of $4.5 billion for the second quarter of 2018.
Through Fannie’s single-family and multifamily business segments, the company provided $140 billion in the third quarter, or 726, 000 home purchases, re-financings and rental units.
Fannie Mae plans to pay, $4 billion in addition to the $171.8 billion in dividends it’s already paid, to the Department of Treasury by Dec. 31.
The single-family guaranty book of business continued to grow in the third quarter of 2018, with the average fee 43 basis points, unchanged with the previous quarter. Fannie provided $122 billion in funding for 360,000 home purchases and 160,000 refinancings. The single-family serious delinquency rate was 0.82% as of Sept. 30, 2018, compared with 1.24% as of Dec. 31, 2017, and 1.01% as of Sept. 30, 2017.
The single-family serious delinquency rate increased in the latter part of 2017 due to the impact of Hurricanes Harvey, Irma, and Maria in 2017, but has since resumed its prior downward trend because many delinquent borrowers in the affected areas have resolved their loan delinquencies by obtaining loan modifications or through resuming payments and becoming current on their loans.
The company’s single-family serious delinquency rate could take a hit in the short term as a result of the hurricanes that occurred late in the third and early in the fourth quarters, which caused some borrowers to miss their payments and could affect delinquency rates. But Fannie doesn’t anticipate their having a material impact on the company’s credit losses or loss reserves. The single- family serious delinquency rate will continue to decline, but at a more modest pace than in the past several years.
Multifamily net income was $549 million in the third quarter, compared with $504 million in the second quarter of 2018. The increase in net income in the third quarter was an increase in guaranty fee revenue as the multifamily guaranty book grew during the quarter, though the fee amounts declined.
New multifamily business volume was $18.2 billion in the third quarter of 2018, an increase from $14.5 billion in the second quarter of 2018. Multifamily new business volume totaled $44.0 billion for the first nine months of 2018. The multifamily serious delinquency rate decreased to 0.07%, as of September 30, from 0.11% as of Dec. 31, 2017.
