Fannie Mae Multifamily Reports Net Income for Q2 2020

Today, we released our second quarter financial results and filed our Form 10-Q with the SEC for the quarter ended June 30, 2020. Below are some highlights from our filing.

Multifamily Business Highlights

• Multifamily's net income was $445 million in the second quarter of 2020, compared with $393 million in the first quarter of 2020. 
• Multifamily revenue was driven by $838 million in net interest income. Approximately 75% of our multifamily net interest income in the quarter was derived from guaranty fee income, which continued to act as a stable driver of earnings for the business. The multifamily guaranty book of business reached approximately $360 billion in the second quarter of 2020, an increase of over 10% year-over-year.
• Multifamily credit-related expense of $238 million was driven by an additional increase in the multifamily allowance for loan losses as a result of economic disruption caused by the COVID-19 pandemic.
• Working with our DUS® Partners, Fannie Mae provided $18.1 billion in multifamily financing for the fourth quarter of 2019 and $33.7 billion for the first half of 2020, leaving $48.2 billion of capacity remaining under our current multifamily volume cap for the remainder of 2020. Multifamily provided liquidity for 373,000 units of multifamily housing in the first half of 2020, with over 90% of those units affordable to families earning at or below 120% of the area median income, providing support for both affordable and workforce housing.
• While Fannie Mae was able to enter into both a Multifamily CIRT^TM (MCIRT^TM) and a Multifamily Connecticut Avenue Securities® (MCAS^TM ) transaction in the first quarter of 2020, we did not enter into credit risk transfer transactions in the second quarter of 2020 due to continuing adverse market conditions resulting from the COVID-19 pandemic. We currently do not have plans to engage in additional credit risk transfer transactions as we evaluate the Federal Housing Finance Agency's (FHFA’s) re-proposed capital rule, which would reduce the amount of capital relief we obtain from these transactions. We will continue to review our plans, which may be affected by our evaluation of the proposed capital rule and changes in the rule as it is finalized, the strength of future market conditions, and our review of our overall business and capital plan to enable us to exit conservatorship.  We expect to continue entering into front-end lender risk-sharing arrangements, primarily through our DUS program.
• As of June 30, 2020, 99% of the unpaid principal balance of our multifamily guaranty book of business had front-end lender risk-sharing, compared with 98% as of December 31, 2019
• The multifamily serious delinquency rate increased to 1.00% as of June 30, 2020 from 0.05% as of March 31, 2020 due to the economic dislocation caused by the COVID-19 pandemic, which increased borrower participation in forbearance plans. The multifamily serious delinquency rate excluding loans in forbearance was 0.09% as of June 30, 2020.  Multifamily seriously delinquent loans are loans that are 60 days or more past due. 

Company Highlights

• Fannie Mae reported net income of $2.5 billion for the second quarter of 2020, compared with net income of $461 million for the first quarter of 2020.  The increase in net income was due primarily to a decline in credit-related expense in the second quarter of 2020 as compared with the first quarter of 2020. The company's credit-related expense in the first quarter of 2020 was driven by a substantial increase in the allowance for loan losses due to the economic dislocation caused by the COVID-19 pandemic. The allowance for loan losses remained relatively flat in the second quarter of 2020.
• Fannie Mae’s net worth increased from $13.9 billion as of March 31, 2020 to $16.5 billion as of June 30, 2020. Based on its agreement with the U.S. Department of the Treasury, the company may retain quarterly earnings until its net worth reaches $25 billion.
• Fannie Mae continues to provide economic relief to borrowers impacted by COVID-19 through its forbearance program. As of June 30, 2020, 5.7% of Fannie Mae's single-family guaranty book of business based on loan count and 1.2% of the company's multifamily guaranty book of business based on unpaid principal balance were in forbearance, the vast majority of which were related to COVID-19.
• Fannie Mae provided more than $575 billion in liquidity to the mortgage market in the first half of 2020, helping borrowers and renters across the country to own or rent a home through the financing of approximately 2.3 million home purchases, refinancings, or rental units.
   

More information is available here:

Q2 2020 Form 10-Q
Q2 2020 News Release
Q2 2020 Financial Supplement