That increase in net income is significantly higher than the first quarter of 2020, when the mortgage giant struggled with restrictions from COVID-19 and posted net income of just $ 500 million.
Fannie Mae reported A net income of $ 5 billion for the first quarter of 2021, mainly driven by fair value gains.
That increase in net income is significantly higher than the first quarter of 2020, when the mortgage giant struggled with restrictions from COVID-19 and posted net income of just $ 500 million. But it’s also a $ 4.6 billion increase in net income in the fourth quarter of 2020.
The increase in net income from the fourth quarter onwards was mainly due to the shift to fair value gains in the first quarter of 2021 due to fair value losses in the fourth quarter of 2020, which were partially offset by lower credit-related income and lower net interest income. Fair value gains were $ 784 million in the first quarter of 2021 compared to fair value losses of $ 880 million in the fourth quarter of 2020. The $ 1.7 billion shift in fair value losses in the previous quarter to fair value gains in the first quarter of 2021 resulted mainly from the introduction of hedge accounting by the company in January 2021.
“COVID-19 continues to present challenges and opportunities for homeowners and renters,” said Hugh Frater, CEO of Fannie Mae. “We had another quarter of the near-record mortgage volume as many took advantage of low interest rates to refinance or buy a home. In addition, more than two-thirds of the 1.3 million Fannie Mae loan homeowners who have indulged have left, even as we continue to help others find solutions. I take pride in our steady achievement and in helping homeowners and tenants in uncertain times. “
Most of Fannie Mae’s business has been in the refinancing market, which thrives when interest rates are low. The company acquired 340,000 home loans and 1.1 million refinance loans in the first quarter, benefiting homeowners from low interest rates.
This focus on refinancing also leads to a decline in the company’s net interest income. Net interest income decreased $ 344 million in the first quarter of 2021 compared to the fourth quarter of 2020, mainly due to a decrease in depreciation income attributable to lower prepayment of single-family home mortgage loans in the first quarter of 2021.
Fannie Mae also reported that since the COVID-19 pandemic began, more than 1.3 million single-family home leniency plans have been launched to help borrowers. As of March 31, 2021, approximately 920,000 of these forbearance loans had been withdrawn, including approximately 337,000 through reinstatement and another 275,000 through the company’s deferred payment option.
For comparison, Freddie Mac reported Earnings were announced on Thursday and net income of $ 2.8 billion for the first quarter was announced. There was also a significant year-over-year increase, mainly due to new business.
In the midst of this year’s low interest rate environment and high demand for home ownership, many are in the 2020s Top Lender Mortgage origins saw double-digit growth, with some showing increases of nearly 350 percent. Even multiple mortgage lenders joined the list of the richest people in the US on Forbes’ billionaires list.
But this year the intensity may slow down. Fannie Mae and Freddie Mac released their predictions earlier this year showing that the real estate market could be before slowing down this year.
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