Multifamily Wire
Fannie Mae Multifamily Reports Net Income for Q3 2020
October 29, 2020
Today, we released our third quarter financial results and filed our Form 10-Q for the quarter ended September 30, 2020 with the SEC. Below are some highlights from our filing.
Multifamily Business Highlights
- Multifamily's net income was $460 million in the third quarter of 2020, compared with $445 million in the second quarter of 2020.
- Multifamily revenue was driven by $786 million in net interest income. Over 80% of our multifamily net interest income in the quarter was derived from guaranty fee income, which continued to provide a stable driver of earnings for the business. The multifamily guaranty book of business increased by $9 billion during the third quarter of 2020 to $367 billion.
- Multifamily credit-related expense of $48 million for the third quarter of 2020 was primarily driven by provision for credit losses on a seniors housing portfolio that was written off, partially offset by a lower estimated multifamily cumulative forbearance take-up rate, which reduced the losses we expect to incur as result of the COVID-19 pandemic from our prior estimate using an expected lifetime loss methodology consistent with our implementation of the CECL standard.
- Working with our DUS Partners, Fannie Mae provided $18.1 billion in multifamily financing for the fourth quarter of 2019 and $48.9 billion for the first nine months of 2020, leaving $33.0 billion of capacity remaining under our current multifamily volume cap for the remainder of 2020. Multifamily provided liquidity for 542,000 units of multifamily housing in the first nine months 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.
- Since the COVID-19 pandemic was declared a national emergency in March 2020, we have broadly offered forbearance to affected multifamily borrowers. As of September 30, 2020, based on unpaid principal balance, 1.3% of Fannie Mae's multifamily guaranty book of business received a forbearance plan, primarily as a result of the COVID-19 pandemic. Approximately half of those loans measured by unpaid principal balance are currently in a repayment plan, and 0.5% of the book, or $1.7 billion, is still in active forbearance.
- Our multifamily serious delinquency rate increased to 1.12% as of September 30, 2020, compared with 1.00% as of June 30, 2020 and 0.04% as of December 31, 2019, as a result of the large number of loans in COVID-19-related forbearances becoming seriously delinquent. Our multifamily serious delinquency rate, excluding loans that received a forbearance, was 0.04% as of September 30, 2020. Our multifamily serious delinquency rate consists of multifamily loans that were 60 days or more past due based on unpaid principal balance, expressed as a percentage of our multifamily guaranty book of business.
Company Highlights
- Fannie Mae reported net income of $4.2 billion for the third quarter of 2020, compared with net income of $2.5 billion for the second quarter of 2020. The increase in net income was due to higher amortization income driven by an increase in mortgage prepayment activity, a decrease in fair value losses, an increase in net investment gains, and a shift to credit-related income in the third quarter of 2020 from credit-related losses in the prior quarter.
- Fannie Mae’s net worth increased from $16.5 billion as of June 30, 2020 to $20.7 billion as of September 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 September 30, 2020, 4.1% of Fannie Mae’s single-family guaranty book of business based on loan count and 0.5% 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 $982 billion in liquidity to the mortgage market in the first nine months of 2020, helping borrowers and renters across the country to own or rent a home through the financing of approximately 3.9 million home purchases, refinancings, and rental units.
More information is available here:
Best,
Michele