Fannie Mae Climbs Low Rates, Will Buy Mortgages In Q2

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Fannie Mae continues to reap the benefits of low mortgage rates as published net profit for the second quarter of 2021 of $ 7.2 billion compared to $ 5 billion in First quarter

Refinancing continued to account for the majority of government-funded company acquisitions. In the second quarter, refinancing accounted for 65%, or $ 243.8 billion, of Fannie Mae’s $ 373.3 billion single-family acquisitions, while refinancing accounted for 70%, or $ 545 billion, of Fannie Mae’s single-family acquisitions for the year.

But unlike last year, purchases reached $ 130 billion, surpassing each of the previous four quarters. According to Fannie Mae, half of these acquisitions were made by homeowners for the first time.

IN moratorium on foreclosure came to an end at the end of July, although borrowers have the option to cut their monthly payments. Fannie Mae said that by the end of June, of the 1.4 million COVID-19 waiver loans, 24% had been recovered, 24% were deferred, 24% were repaid, and 23% remain active.

Including deferred loans, 2.08% of Fannie Mae’s single-family loans are seriously delinquent, fifty basis points less than in the first quarter of 2021.

Company executives said the company remains undercapitalized, although Fannie Mae’s net worth rose to $ 37.3 billion in the second quarter. The net worth to assets ratio also increased from 0.7% in the first quarter to 0.9% in the second quarter.

The company also continues to maintain credit risk transfers on hold. In March 2020, Fannie Mae and Freddie Mac suspend credit risk transfers, which shift some of the risk of credit losses on mortgages they insure to investors. Freddie Mac has resumed these transfers by the end of 2020, but Fannie Mae has not entered into any new credit risk transfer transactions since then.

As a result, the percentage of its warranty coverage covered by the CRT fell to 21% in the second quarter of 2021. In 2019, the last full year that CRT conducted transactions, its risk mitigation strategy covered 46% of its portfolio.

David Benson, Fannie Mae’s president and acting chief financial officer, said Fannie Mae did indeed expect refinancing to decline in the second half of the year due to “a moderate expected rise in interest rates.”

During the quarterly income statement, Fannie Mae CEO Hugh Frater said that, in addition to Fannie Mae’s strong performance and economic recovery, housing is still out of reach for many.

“We understand that the housing market we serve is not meeting the needs of everyone,” said Frater. “We need to change that. It takes both big and small actions to move housing in the right direction. ”

Hugh also noted that Fannie Mae supports the statements. Housing and urban development Secretary Marcia Fudge and Federal Agency for Housing Finance Acting Director Sandra Thompson, showing her commitment fairer housing system

The company also said that in light of the uncertainty surrounding the pandemic, it will consider a hybrid work-from-home model for its employees. He reported that the vast majority of employees work remotely, although employees can now volunteer from the main office.

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