Published On: Tue, May 31st, 2016

What Did Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA) Say Happened?

Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA), or Fannie Mae, recently released its monthly summary for the month of April 2016. In the document, the company provides a wide range of updates including gross mortgage portfolio, interest rate risk measures, mortgage-backed securities and serious delinquency among others.

What exactly is in the report?

First, the report contains a summary of the company’s activities for the month of April as well for the year-to-date period. In the document, Fannie Mae said that its book of business shrank at a compound annualized rate of 0.5% during April 2016. Furthermore, gross mortgage portfolio contracted at a compound annualized rate of 15.4% in the same month.

What else happened in the month?

According to Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA), serious delinquency rate for conventional single-family decreased 0.04% to hit 1.40%. A decrease of 0.05% of serious delinquency rate for multifamily was also registered in the month.

Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA) said it performed 7,097 loan modifications during the month of April.

What’s the future of Fannie Mae?

Fannie Mae’s update on April activities comes at a time when discussion about the future of the company and its sibling Federal Home Loan Mortgage Corp (OTCMKTS:FMCC) has been heating up in the recent times. The two mortgage giants remain firmly under the grip of the government nearly eight years after their historic bailout.

Although Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA) and Freddie Mac have largely recovered from the shocks of the financial crisis, they continue to turn nearly all their profits to the government and their capital buffer is also on the decline. Some analysts that the government’s tight hold on Fannie Mae and Freddie Mac could trigger need for another bailout of the companies.

Politics and changes in accounting are some of the factors cited as potential triggers of bailout 2.0 for Federal National Mortgage Assctn Fnni Me (OTCMKTS:FNMA) and its sibling Freddie Mac. While the second round of bailout might be at a smaller scale compared to the earlier one, the aftermath could just be as devastating as the previous one. For example, some fear that a second bailout of the mortgage companies could see lawmakers in Washington pass laws that could make home mortgages more expensive for those who seek them.

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