Fannie Mae-No Politics (FNMA)

[navycmdr]

Fannie and Freddie are About to Provide a Nice Revenue Gift to Trump Administration

By Paul Muolo [e-mail]

Thanks to stellar fourth quarter MBS issuance – coupled with higher interest rates at Dec. 31 – Fannie Mae and Freddie Mac are likely to report their best quarterly earnings of 2016, money that will go directly into the U.S. Treasury.

According to interviews conducted by Inside Mortgage Finance, the general consensus among observers is that the two government-sponsored enterprises will post a combined profit north of $5.5 billion.

In 2016, the two guaranteed $973.72 billion of single-family loans, an 18.1 percent improvement from the year prior. Guaranty fee income is based on the outstanding supply of mortgage-backed securities, which rose 7.2 percent at Fannie and 4.3 percent at Freddie in 2016.

But Fannie and Freddie are more than just guarantors. They have combined mortgage portfolios of roughly $593 billion, including whole loans and securities – assets that must be hedged to protect against sudden moves in interest rates. For the full story, see the new edition of Inside Mortgage Finance, now available online.