Fannie Mae's penny stock has been getting more attention amid
The prospect of
"The value of the common stock would be highly uncertain in a recap, but preferred issuers are likely to be redeemed or converted at face value," Vlae Kershner, an investor, wrote
While Calabria, who is speaking later this morning at an event in Washington,
Some experts have questioned the likelihood of a release from conservatorship in the next four years because the two entities
"Trouble is, when a financial institution gets to a certain size and scope, it can only function with sovereign support," said Chris Whalen wrote in his
The earnings Fannie reported Tuesday are more a reflection of the financial soundness of entities in conservatorship than its status as an investment at this point, and they do show its ability to operate as more of a standalone entity is a work in progress.
In an earnings call, CEO Priscilla Almodovar characterized Fannie's results as a means of continuing its work toward reducing its capital shortfall and building its net worth.
Its latest numbers show single-family loan purchases rebounded from the
The government-sponsored enterprise's net income was $4.5 billion during the second quarter. In comparison, Fannie earned $4.3 billion in the previous fiscal period and $5 billion a year earlier.
The large quasi-governmental mortgage investor bought $86 billion in home mortgages during the three-month period between April and June, which includes the spring buying season. That number was up from $62 billion in the first quarter, but down from $89 billion
This year's increase in loan purchases, combined with a shift toward
There's demographic demand for housing, but
"Our economists expect that similar affordability challenges will persist for the remainder of this year," Almodovar said.
The majority of the loans Fannie bought in the second quarter came from home purchases. Refinancing activity did account for $11 billion of the single-family mortgages bought during the second quarter, up from $9 billion in Q1 but down from $13 billion in Q2 2023.
Net revenues rose to $7.34 billion in the second quarter, relative to almost $7.1 billion in the first and a little over $7.1 during the Q4 2023.
Fannie recorded a net $300 million benefit for credit losses in the quarter resulting primarily from the release of single-family reserves due to differences between actual and forecast home prices. This offset an increase in multifamily reserves and a provision for new SF acquisitions.
"The increase in multifamily reserves was due primarily to continued declines in actual and near term projected property values, and the impact of new 30 day loan delinquencies," Chief Financial Officer Chryssa Halley said during the earnings call.
Halley warned that there could be pressure on single-family loan performance too, although Fannie's serious delinquency rate fell another notch in the quarter to 48 basis points from 51 in the previous fiscal period and remains near historic lows.
"A slowing economy may impact the credit performance of loans and our single family guarantee books, which could lead to an increase in our single-family serious delinquency rate," she said.
