FNMA is a $3 trillion financial services business, Providing Liquidity to the Housing Market
Fannie Mae ( OTC Bulletin Board: FNMA ), a $3 trillion financial services business, is a leading provider of mortgage credit. As a secondary market participant, we do not lend directly to consumers. We are a government-sponsored enterprise (GSE) chartered by Congress to keep liquidity flowing to mortgage lenders such as local and national banks, thrifts, credit unions, and other financial institutions. We purchase and guarantee their loans to enable families to buy homes, refinance their existing mortgages, or access affordable rental housing. We package loans into Fannie Mae mortgage backed securities (MBS), which global investors can purchase.
From the beginning of 2009 through the first quarter of 2012, we provided approximately $2.6 trillion in liquidity to the market. In our single-family business, this helped borrowers to refinance 7.4 million mortgages and purchase 2.1 million homes. In multifamily, we provided financing for more than 1.2 million units of quality rental housing - and more than 85 percent of those units were affordable to families earning at or below the median income in their area.
Commitment to Sustainable Homeownership ( OTC Bulletin Board: FNMA )
For Americans who are ready to buy a home, we believe they should have access to affordable, sustainable options. Since 2009, we have strengthened our underwriting and eligibility standards to help ensure borrowers have access to mortgages they can afford over the long term. This includes the 15- and 30-year fixed-rate mortgages - two long-term options that protect homeowners from fluctuating interest rates. We're also working with our lenders to help them better understand the quality of a loan before they sell it to Fannie Mae ( OTC Bulletin Board: FNMA ), which helps to reduce future risks for both the lender and Fannie Mae. We believe the changes we've made in our standards are contributing to a stronger housing market.
As of March 31, 2012, our new book of business - comprising loans that originated after 2008 - accounted for 56 percent of our total single-family book of business. The serious delinquency (SDQ) rates on Fannie Mae's single-family loans continue to be substantially lower than private market levels. The single-family SDQ rate reflects the percentage of loans we hold in our book that are 90 days or more past due or in the foreclosure process. At Fannie Mae, our single-family SDQ rate was 3.67 percent at the end of March 2012, and has decreased each quarter since the first quarter of 2010.
By encouraging sustainable mortgage lending, Fannie Mae ( OTC Bulletin Board: FNMA ) is working to support our partners, help homeowners and communities, and build a better housing finance system.
Commitment to Quality Multifamily Rental Housing ( OTC Bulletin Board: FNMA )
In addition to supporting the single-family housing market, Fannie Mae is a primary source of capital for the multifamily market. This enables lenders to finance various types of quality rental properties, including housing for working Americans, senior citizens, students, and members of the military.
A substantial volume of our multifamily business is conducted through our Delegated Underwriting and Servicing (DUS(r)) program, which combines sustainable credit standards, delegation of underwriting and servicing to a network of lenders, and a risk-sharing model for potential losses on the loans. DUS has had a successful track record as reflected by its reputation in the marketplace among borrowers, lenders, and investors, and has outperformed other commercial mortgage-backed securities (CMBS). As of March 31, 2012, Fannie Mae's multifamily SDQ rate was 0.37 percent, down from 0.59 percent as of December 31, 2011. By comparison, the SDQ rate was 12.61 percent at the end of 2011 for loans held in CMBS.
Our Role in Capital Markets ( OTC Bulletin Board: FNMA )
Fannie Mae's capital markets group helps promotes liquidity in the mortgage market. We provide lender customers with various avenues to sell the mortgages they originate. This allows lenders to choose the method of execution that will work best for their needs, helps them to replenish their funds so they can make more loans, and gives them various options for implementing their preferred hedging strategy.
As America's largest single issuer of mortgage-backed securities (MBS), Fannie Mae ( OTC Bulletin Board: FNMA ) has helped create a reliable securitization market, which in turn supports the recovery and growth of U.S. housing. Our diverse line of single-family and multifamily product offerings are aimed at meeting investor needs.