Fannie Mae Back in Black With Taxpayers
The fourth quarter of 2013 was its eighth consecutive profitable quarter Fannie Mae said today and the company posted net income for the entire year of $84.0 billion and pre-tax income of $38.6 billion. In 2012 the government sponsored enterprise (GSE) had both net income and pre-tax income of $17.2 billion. The 2013 annual net income includes a one-time release of the company's valuation allowance against its deferred tax assets.
Fannie Mae reported net income of $6.5 billion for the fourth quarter and pre-tax income of $8.3 billion. Net income in the third quarter was $8.7 billion. The company's comprehensive income of $6.6 billion for the fourth quarter of 2013 contributed to Fannie Mae's positive net worth of $9.6 billion as of December 31, 2013.
The GSE will pay a $7.2 billion dividend to the U.S. Treasury in March bringing the total dividends in 2013 to $85.4 billion. Since the company was placed in federal conservatorship in 2008 it has paid a total of $121.1 billion in dividends against $114.1 billion in draw requests. Under the Senior Preferred Stock Agreement with Treasury the dividends do not offset prior Treasury draws and the company is not allowed to retain earnings or build net worth beyond a periodically diminishing buffer.
Fannie Mae's Net interest income was $4.9 billion for the fourth quarter of 2013, compared with $5.6 billion for the third quarter of 2013. The decrease was due to lower amortization driven by prepayment volumes and lower interest income from retained mortgage portfolio assets as that portfolio continues to shrink. For the year, net interest income was $22.4 billion for 2013, compared with net interest income of $21.5 billion for 2012. Lower interest income from the retained mortgage portfolio was offset by higher amortization driven by prepayment volumes and an increase in guaranty fees.
Fannie Mae's single-family business segment had net income of $2.1 billion in the fourth quarter of 2013, compared with net income of $4.7 billion in the third quarter of 2013. The decrease in net income in the fourth quarter compared to the third quarter was driven by lower credit-related income due primarily to slower home price improvement in the quarter. For the year, the Single-Family business had net income of $48.3 billion, compared with net income of $6.3 billion in 2012. Guaranty fee income increased in 2013 compared with 2012 due to the impact of guaranty fee increases. The single-family guaranty book of business was $2.89 trillion as of December 31, 2013, compared with $2.88 trillion as of September 30, 2013 and $2.83 trillion as of December 31, 2012.
The multifamily business sector had net income of $706 million in the fourth quarter of 2013, compared with $478 million in the third quarter of 2013 with the increase primarily to increased credit-related income from improvements in property valuations, as well as increased gains from partnership investments. For the year the sector had net income of $10.1 billion, compared with $1.5 billion in 2012. The Multifamily guaranty book of business was $200.6 billion as of December 31, 2013, compared with $203.7 billion as of September 30, 2013 and $206.2 billion as of December 31, 2012.
The third segment, the Capital Markets group had net income of $4.5 billion in the fourth quarter of 2013, compared with $3.8 billion in the third quarter of 2013.
Fannie Mae remained the largest single issuer of single-family mortgage-related securities in the secondary market during the fourth quarter with an estimated market share of 46 percent compared to 48 percent a year earlier. Its market share for all of 2013 was 47 percent. The company has provided approximately $4.1 trillion in liquidity to the mortgage market from January 1, 2009 through December 31, 2013, purchasing or guaranteeing 12.3 million mortgage refinancings and 3.7 million home purchases, and providing financing for 2.2 million units of multifamily housing.
The company's total loss reserves decreased to $47.3 billion as of December 31, 2013 from $62.6 billion as of December 31, 2012. The company's total loss reserves peaked at $76.9 billion as of December 31, 2011.
Serious single-family delinquencies have declined each quarter since the first quarter of 2010, and the rate was 2.38 percent as of December 31, 2013, compared with 5.47 percent as of March 31, 2010. This decrease is primarily the result of home retention solutions, foreclosure alternatives, and completed foreclosures, as well as the company's acquisition of loans with stronger credit profiles since the beginning of 2009. The company provided approximately 234,000 loan workouts in 2013 to help homeowners stay in their homes or otherwise avoid foreclosure.
Fannie Mae acquired approximately 139,000 loans in the fourth quarter of 2013 and approximately 1 million loans for the full year of 2013 through its Refi PlusTM initiative, which includes HARP, Refinancings delivered to Fannie Mae through Refi Plus in 2013 reduced borrowers' monthly mortgage payments by an average of $223.
Fannie Mae acquired 32,208 single-family REO properties, primarily through foreclosure, in the fourth quarter of 2013, compared with 37,353 in the third quarter of 2013. As of December 31, 2013, the company's inventory of single-family REO properties was 103,229, compared with 100,941 as of September 30, 2013. The carrying value of the company's single-family REO was $10.3 billion as of December 31, 2013.
The company's single-family foreclosure rate was 0.82 percent for the full year of 2013. This reflects the number of single-family properties acquired through foreclosure or deeds-in-lieu of foreclosure as a percentage of the total number of loans in Fannie Mae's single-family guaranty book of business.