Fannie Mae saw its secondary purchases tumble last month and delinquency rise. While it reported a massive quarterly loss, its regulator was so pleased with the timeliness of its financial reporting that it has agreed to lift the company's portfolio caps.
New business acquisitions were $54.0 billion during January, falling from $73.4 billion the prior month, according to a monthly operations summary released today by the secondary lender. A year earlier, Fannie acquired $51.1 billion in loans.
The Washington, D.C.-based company said its book of business was $2.911 trillion on Jan. 31. The book of business consisted of an $0.721 trillion gross mortgage portfolio and $2.190 trillion in outstanding mortgage-backed securities.
Residential loan delinquency of at least 90 days, reported on a one-month lag, jumped to 0.98 percent from 0.90 percent the prior month. Delinquency has climbed each of the past seven months. Multifamily delinquency was unchanged at 0.08 percent.
Fannie said its effective duration gap was one month in January, down from two months in December.
The government sponsored housing enterprise also today reported a fourth quarter loss of $2.1 billion, worse than its $1.4 billion third quarter loss and a significant deterioration from a $4.1 billion profit a year earlier. Credit-expenses were $5.0 billion while the fair value losses on derivatives were $4.1 billion.
"We are working through the toughest housing and mortgage markets in a generation," said President and Chief Executive Officer Daniel H. Mudd in the report. "While we are pleased that demand for our mortgage guaranty businesses has surged as we respond to the market's urgent need for liquidity and stability, this positive trend has been far outweighed by the negative financial impacts of rising mortgage defaults, falling home prices, and extraordinary disruptions in the credit markets."
The filing of Fannie's financials marks the first time in years the company has reported the data on time. The company, along with cousin Freddie Mac, was praised by its regulator.
"These steps constitute an important milestone in remediation of their respective operational and control weaknesses that led to multi-year periods when neither company released timely, audited financial statements," James B. Lockhart, director of the Office of Federal Housing Enterprise Oversight, said in a statement today. "They are in a much better capital position to deal with today's difficult and volatile market conditions and their significant losses."
Lockhart went on to say that as a result of the progress Fannie and Freddie have made in their filings, the regulator will remove the portfolio growth caps for the two GSEs on March 1.
OFHEO is considering gradually reducing a requirement that the two companies maintain capital at least 30 percent higher than the statutory minimum.
But the National Association of Home Builders said the regulator needs to move more quickly.
"The capital penalty raises costs for the GSEs, and both Fannie Mae and Freddie Mac have taken several steps in recent weeks to raise lending fees, which result in higher costs for home buyers at a time when the housing market is struggling to stay afloat," NAHB said in an announcement today. "Now that Fannie and Freddie have their books in order and have addressed operational concerns, OFHEO should move immediately to rescind their 30 percent capital surcharge."