Fannie Earnings Cross a Rubicon; Delinquencies Down in 4Q - IMFnews

Share Register Advertise February 12, 2021 Fannie’s Net Worth Tops $25 Billion, with $4.6B in 4Q Income dhollier@imfpubs.com Fannie Mae earned net income of $4.6 billion in the fourth quarter, bringing the company’s annual profits to $11.8 billion. As a result, Fannie’s yearend net worth exceeded $25 billion, which represents a sort of erstwhile Rubicon for the enterprise. Until the Treasury Department and the Federal Housing Finance Agency amended their preferred stock purchase agreement in January, a $25 billion net worth was the threshold for restarting the net worth sweep of Fannie’s quarterly profits. Now, however, the new PSPA allows Fannie to continue retaining earnings until its net worth is sufficient to exit conservatorship. And 2020 was a record year for Fannie, which purchased $1.4 trillion in single-family mortgages for the year, including an extraordinary $948 million in refinanced loans. Nevertheless, net income was down $2.4 billion from 2019. Most of that decline was due to a $4.4 billion drop in credit-related income driven by pandemic-related expenses. But Fannie’s financial performance appeared to improve somewhat in the fourth quarter, with net revenues increasing 7% to $7.2 billion and a $920 million gain in credit-related income. For the last three months of 2020, Fannie’s profits were up 9.5%, from $4.2 billion in the third to $4.6 billion in the fourth quarter. Delinquencies Decline Across the Board in Fourth Quarter bivey@imfpubs.com The total share of mortgages past due and in foreclosure was 6.68% at the end of 2020, down from 6.93% as of Sept. 30, according to Inside Mortgage Finance’s large servicer delinquency index. Generally, for surveys, servicers are reporting loans as delinquent when borrowers miss payments, regardless of whether the mortgage is in forbearance. Time-based measures of delinquency rates showed slight declines during the fourth quarter of 2020, as did the foreclosure rate. Foreclosures remain few and far between due to various moratoriums in place. Delinquencies declined across loan categories during the fourth quarter, according to the Mortgage Bankers Association. The delinquency rate for conventional mortgages hit 5.09% at the end of the year while the FHA delinquency rate was 14.65% and the rate for VA loans was 7.29%. Meanwhile, the share of loans in foreclosure remains a concern. For more details, see the new issue of Inside Mortgage Finance. Heads Up: CFPB Looking to Hire Attorneys bivey@imfpubs.com In another signal that the Consumer Financial Protection Bureau will be more aggressive under new leadership, the regulator announced this week that it’s recruiting attorneys. “The CFPB is currently working to ramp up the vigor of our oversight of consumer financial laws and is seeking highly qualified attorneys at all experience levels to join our team,” the regulator said in its hiring notice. The CFPB said new hires will work on enforcement and supervision, along with drafting regulations. Dave Uejio, acting director of the regulator, said the CFPB’s goal is to make rules more effective, to consistently and fairly enforce the rules and to empower consumers to take more control of their economic lives. “Achieving this goal requires vigorous oversight of all applicable federal laws and the fullest utilization of our legal authorities,” he said. Pending Head of HUD Looking to Improve Tribal Lending Program mvolkova@imfpubs.com Marcia Fudge, the Biden administration's nominee for secretary of the Department of Housing and Urban Development, expressed willingness to improve HUD’s mortgage program aimed at Native Americans. Section 184 home loans are specifically allocated to Native Americans who are purchasing property on tribal land trusts. The loans are 100% guaranteed by HUD. However, obtaining these loans has been a struggle for many potential homebuyers due to operational burdens within the Bureau of Indian Affairs. Fudge was asked about the issue during her nomination hearing before the Senate Committee on Banking, Housing and Urban Affairs. For more details, see the new issue of Inside FHA/VA Lending, which will be published later today. Short Takes: loanDepot’s Stock Rises / Average G-Fee Declines / UpEquity Raises $25 Million / Forbearance Share Declines bivey@imfpubs.com After pricing its initial public offering at $18.00 per share Thursday, loanDepot’s stock ended its first day of trading up 57.1%... The average guarantee fee charged by Fannie Mae on newly acquired conventional single-family mortgages decreased 0.6 basis points on an annual basis to 46.4 bps in 2020. The fee, which is net of a surcharge placed by Congress, primarily declined due to the stronger credit profile of loans Fannie acquired in 2020... UpEquity, an Austin, TX-based mortgage platform focused on home purchases, raised $25 million of Series A funding. The lender, which originated $100 million of mortgages in 2020, allows homebuyers to make cash offers and provides financing for the purchase... The number of mortgages in forbearance declined by 48,000 on a weekly basis to 2.67 million as of Feb. 9, according to estimates by Black Knight. An estimated 5.0% of mortgages are in forbearance. PUBLISHING BREAK: IMFnews will not appear Monday, Feb. 15 in observance of Presidents' Day. Publication will resume Feb. 16. IMF’s Annual Salary Survey Is Now Open Inside Mortgage Finance, the mortgage market’s leading source of detailed industry data, is once again conducting our annual Salary Survey, and we need to hear from you (and your peers)! It’ll take just a few minutes of your time to contribute to this important survey benchmarking industry compensation. In return for your help, we’ll send you a brief report on compensation levels in the industry (after the survey closes). The survey will close in a few weeks, so please take it today. To ensure delivery to your inbox, add news@imfpubs.com to your address book or safe sender list. Home | Update Your Account | Mortgage Data | User Agreement | Unsubscribe © Copyright 2020 Inside Mortgage Finance Publications 7910 Woodmont Ave., Suite 1000, Bethesda, MD 20814 Tel: (301) 951-1240; Fax: (301) 656-1709

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