Magazine article Mortgage Banking

Fannie Mae Reports $4.6 Billion in Net Income

Magazine article Mortgage Banking

Fannie Mae Reports $4.6 Billion in Net Income

Article excerpt

Fannie Mae, Washington, D.C., reported net income of $4.6 billion in the second quarter and comprehensive income of $4.4 billion. With the positive results, the company will send another dividend payment to the Treasury of $4.4 billion, which is expected to be paid in September.

With the latest dividend payment, Fannie Mae will have paid the federal government a total of $142.5 billion, which is more than the $116.1 billion in total prior draws on the Treasury since 2008. Dividend payments do not reduce the amount the company had to draw from the government during the housing crisis to maintain a positive net worth.

The company said both the net income and comprehensive income numbers were well above the prior quarter's numbers. In this year's first quarter, the company earned net income of $1.9 billion and comprehensive income of $1.8 billion.

Fannie Mae noted in its Aug. 6 press release, "The company's financial results for the second quarter of 2015 were affected by an increase in interest rates. Although the increase in interest rates had a positive impact on the fair value of the company's financial instruments, the increase in interest rates had a negative impact on its credit-related expense."

Net revenues were $6.2 billion for the second quarter, Fannie Mae said. That compares favorably with $5.4 billion in the first quarter. Net revenues include net interest income and fee and other income. Net interest income, which includes guaranty fee revenue, was $5.7 billion for the second quarter. The company estimates that the majority of its net interest income for the second quarter came from guaranty fees on loans underlying its mortgage-backed securities. Fannie said it expects guaranty fees will continue to account for an increasing share of its net interest income.

Net fair value gains played a significant role in pumping up income in the second quarter. …

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