Fannie Mae and Freddie Mac – in conservatorship for almost eight years now – posted combined net income of $3.94 billion for the second quarter, with an assist from higher guaranty fee income and a noticeable decline in hedging charges. Fannie’s profit was $2.9 billion for the second quarter, more than double the $1.1 billion reported last quarter. The GSE attributed the increase in net income to lower fair value losses in the quarter, coupled with high credit-related income due to home price increases and interest rate decreases. Higher net revenues driven by increased mortgage prepayments also helped. Fannie booked $3.26 billion of guaranty fee income in 2Q16, compared to $3.22 billion in the first quarter.
The multifamily market continued to stay strong in the first half of 2016, despite a slowdown in origination volume. GSE multifamily business soared with record volumes in 2015 when lending reached $90 billion. Freddie Mac said steady economic growth and key drivers will keep the multifamily market moving forward through the remainder of 2016 and into next year. In its mid-year multifamily outlook, the mortgage giant noted that origination volume will have another record year in 2016, thanks to increasing property prices, new completions and maturities. Although fundamentals moderated some in the first half of the year, Freddie said they won’t decelerate enough to derail the multifamily industry because demand remains robust.
OPERS Lawsuit Reinstated Over Freddie Subprime Loans. The Sixth U.S. Circuit Court of Appeals overturned a lower court decision that had cleared Freddie Mac of charges that it misled investors about its involvement in the subprime mortgage market. The lawsuit was filed in 2008 by the Ohio Public Employees Retirement System, which claimed Freddie made false public financial statements that hid its exposure to risky loans. The fund alleged that it lost more than $27.2 million as the value of Freddie stock plummeted. OPERS said the 29 percent drop in stock price in 2007 followed Freddie’s disclosure of a $2 billion loss. The pension fund claimed...
The Democratic Party released its 2016 platform and its priorities range from expanding foreclosure prevention programs to increasing access to affordable housing and preserving the 30-year fixed-rate mortgage. Dave Stevens, president and CEO of the Mortgage Bankers Association, said that when it comes to housing, the Democratic and Republican platforms are starkly different. “The Republican platform is almost solely about removing burdens on financial institutions and others who build homes, and the Democratic platform deals with both the demand and supply side in their policies,” he said during one of several real estate panels held at the Democratic National Convention in Philadelphia Democrats specifically mentioned...
Corona Asset Management XVIII won Fannie Mae’s fourth Community Impact Pool of nonperforming loans. Last week’s announcement represented the first time that the pool was sold to a private equity firm instead of a nonprofit group. The Community Impact Pool is structured to encourage nonprofits, as well as smaller investors and minority- and women-owned businesses. It’s designed to include geographically focused, high-occupancy collateral where bidders have a longer than usual time to participate in hopes of attracting diverse participation. Fannie began marketing this particular pool to possible bidders back in June with Bank of America Merrill Lynch and CastleOak Securities, L.P.
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