GSEs Report 2nd Quarter Financials; Freddie Announces New Mortgage Product
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac doubled their year-over-year net income during the second quarter of 2021.
Fannie’s net income for the quarter was $7.2 billion, an increase of 181 percent over the $2.5 billion net income in the second quarter of 2020. The company’s recent quarter also produced a 43 percent increase over the $5 billion booked in the first quarter of 2021.
Freddie reported net income of $3.7 billion during the period, an increase of 107 percent year-over-year. The company reported $2.8 billion net income in the first quarter of the year.
Fannie’s net worth increased to $37.3 billion as of June 30, while Freddie’s net worth is $22.4 billion.
Fannie had $129.5 billion of single-family home purchase acquisitions, a record high, of which nearly 50 percent were for first-time homebuyers. Fannie also recorded $243.8 billion in refinance acquisitions. Freddie’s new business activity was $288 billion, up 24 percent year-over- year, reflecting strong home purchase and refinance activity.
Combined, the GSEs provided $690 billion in liquidity to single-family and multifamily mortgage markets in the second quarter of the year.
As of June 30, 1.8 percent of Fannie’s single-family guaranty book of business based on loan count, was in forbearance, the vast majority of which was related to the COVID-19 pandemic. Since the start of the pandemic, 74 percent of Fannie’s loans that entered forbearance have successfully exited.
About 1.67 percent of Freddie’s single-family mortgage, based on loan count, were in forbearance as of June 30.
Freddie also last week announced a new mortgage product to help homeowners finance the cost of small-scale renovations.
The company’s new CHOICEReno eXPress mortgage, available for mortgages with settlement dates on and after November 1, will enable homeowners to finance projects such as replacing windows and doors, roof repairs, minor remodeling and painting.
“CHOICEReno eXPress expands upon the Freddie Mac CHOICERenovation mortgages, which were designed to help address the nation’s aging housing supply, support the need for affordable housing, and offer renovation, repair, improvement, or refinance options to support the increasing demand for cost-effective financing solutions,” said Danny Gardner, senior vice president of client and community engagement for Freddie Mac’s Single-Family business. “CHOICEReno eXPress will help homebuyers and homeowners reduce their out-of-pocket costs by offering more affordable loan terms than using credit cards or unsecured financing when making small-scale renovations.”
Lenders can sell CHOICEReno eXPress mortgages to Freddie Mac when the loan proceeds are used to pay for renovations of up to 10 percent of the home’s as-completed value (up to 15 percent in rural regions with high needs classification) without requiring special lender pre-approval or lender recourse depending on the purchase price. A completed inspection is required to verify that the planned renovations were completed.
“Lenders with an interest in providing a renovation mortgage to their clients, but have limited experience in renovation and construction lending, will also find CHOICEReno eXPress is an attractive offering because of its streamlined operational requirements,” added Gardner.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
