Federal National Mortgage Association Fannie Mae 8-K, filed Oct 29, 2021

Federal National Mortgage Association Fannie Mae (FNMA)

8-K 2021-10-29 For: 2021-10-29

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Added on April 05, 2026

About this 8-K

Federal National Mortgage Association Fannie Mae filed this 8-K on October 29, 2021.

Items reported

Item 2.02: Financial results
Item 9.01: Financial statements and exhibits

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A



Exhibit Number						Description of Exhibit
99.1						News release, dated October 29, 2021
99.2						Q3 2021 Financial Supplement, dated October 29, 2021
104						Cover Page Interactive Data File (embedded within the Inline XBRL document)



						FEDERAL NATIONAL MORTGAGE ASSOCIATION

			By:			/s/ David C. Benson
						David C. Benson
						President (and Interim Chief Financial Officer)


Summary of Financial Results
(Dollars in millions)	Q321		Q221		Variance		% Change		Q320		Variance		% Change
Net interest income	$	6,972	$	8,286	$	(1,314)	(16)	%	$	6,656	316		5	%
Fee and other income	111		103		8		8	%	93		18		19	%
Net revenues	7,083		8,389		(1,306)		(16)	%	6,749		334		5	%
Investment gains, net	243		646		(403)		(62)	%	653		(410)		(63)	%
Fair value losses, net	(17)		(446)		429		96	%	(327)		310		95	%
Administrative expenses	(745)		(746)		1		—	%	(762)		17		2	%
Credit-related income	868		2,547		(1,679)		(66)	%	430		438		102	%
Temporary Payroll Tax Cut Continuation Act of 2011 (TCCA) fees	(781)		(758)		(23)		(3)	%	(679)		(102)		(15)	%
Other expenses, net*	(543)		(598)		55		9	%	(686)		143		21	%
Income before federal income taxes	6,108		9,034		(2,926)		(32)	%	5,378		730		14	%
Provision for federal income taxes	(1,266)		(1,882)		616		33	%	(1,149)		(117)		(10)	%
Net income	$	4,842	$	7,152	$	(2,310)	(32)	%	$	4,229	$	613	14	%
Total comprehensive income	$	4,828	$	7,120	$	(2,292)	(32)	%	$	4,216	$	612	15	%
Net worth	$	42,173	$	37,345	$	4,828	13	%	$	20,693	$	21,480	104	%


* Other expense, net also includes credit enhancement expense and change in expected credit enhancement recoveries



Financial Highlights

•						Net income decreased $2.3 billion in the third quarter of 2021 compared with the second quarter of 2021 driven primarily by a decrease in credit-related income and lower net interest income.

•						Credit-related income decreased $1.7 billion in the third quarter of 2021 compared with the second quarter of 2021 driven primarily by a decrease in the volume of loan redesignations, less benefit from both actual and forecasted home price growth, and increases in interest rates. Credit-related income in the third quarter of 2021 was driven primarily by strong actual and forecasted home price growth and a reduction in the company’s estimate of losses it expects to incur as a result of the COVID-19 pandemic.

•						Net interest income decreased $1.3 billion in the third quarter of 2021 compared with the second quarter of 2021 driven primarily by a decrease in net amortization income. Single-family mortgage loan prepayment activity slowed in the third quarter of 2021 compared to the second quarter of 2021; however, refinancing activity remained strong due to the continued low interest-rate environment.

•						Strong earnings for the third quarter of 2021 support Fannie Mae’s continued efforts to build capital; however, the company remains significantly undercapitalized as of September 30, 2021.


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))







Key Business Highlights

•			Single-family conventional acquisition volume was $296.4 billion in the third quarter of 2021, compared with $373.3 billion in the second quarter of 2021. Purchase acquisitions decreased from $129.5 billion in the second quarter of 2021 to $115.4 billion in the third quarter of 2021, of which nearly 50% were for first-time homebuyers. Refinance acquisitions were $180.9 billion in the third quarter of 2021, a decline from $243.8 billion in the second quarter of 2021, but remained at a high level due to the continued low interest-rate environment.

•			Average single-family conventional guaranty book of business during the third quarter of 2021 increased from the second quarter of 2021 by 2.3%. Record home price appreciation in the first nine months of 2021 has reduced the weighted-average mark-to-market loan-to-value ratio of our single-family conventional guaranty book of business to 54% as of September 30, 2021. The weighted average FICO credit score of the company’s single-family conventional guaranty book of business was 752 as of September 30, 2021.

•			Average charged guaranty fee, net of TCCA fees, on the single-family conventional guaranty book increased from 45.2 basis points for the three months ended June 30, 2021 to 45.4 basis points for the three months ended September 30, 2021. Average charged guaranty fee on newly acquired single-family conventional loans, net of TCCA fees, decreased 0.6 basis points compared with the second quarter of 2021. Removal of the adverse market refinance fee in August 2021 contributed to the decrease.

•			As of September 30, 2021, 1.2% of the single-family guaranty book of business based on loan count, or 206,293 loans, was in forbearance, the vast majority of which was related to the COVID-19 pandemic, compared with 1.8% as of June 30, 2021. Since the start of the pandemic, 81% of loans that entered forbearance have successfully exited.

•			Single-family serious delinquency rate decreased to 1.62% as of September 30, 2021, from 2.08% as of June 30, 2021, due to the on-going economic recovery and the decline in the number of the company’s single-family loans in a COVID-19 forbearance plan. Single-family serious delinquency rate excluding loans in forbearance increased from 0.64% as of June 30, 2021 to 0.72% as of September 30, 2021 primarily due to loans exiting forbearance without resolving their delinquency. Single-family seriously delinquent loans are loans that are 90 days or more past due or in the foreclosure process.


Multifamily Business Financial Results
(Dollars in millions)	Q321		Q221		Variance		% Change		Q320		Variance		% Change
Net interest income	$	1,102	$	963	$	139	14	%	$	786	$	316	40	%
Fee and other income	25		23		2		9	%	20		5		25	%
Net revenues	1,127		986		141		14	%	806		321		40	%

Fair value gains (losses), net	14		(60)		74		NM		(83)		97		NM
Administrative expenses	(125)		(127)		2		2	%	(128)		3		2	%
Credit-related income (expenses)	61		22		39		177	%	(48)		109		NM
Credit enhancement expense	(59)		(55)		(4)		(7)	%	(51)		(8)		(16)	%
Change in expected credit enhancement recoveries	(14)		13		(27)		NM		—		(14)		NM
Other income (expense), net	14		23		(9)		(39)	%	64		(50)		(78)	%
Income before federal income taxes	1,018		802		216		27	%	560		458		82	%
Provision for federal income taxes	(201)		(157)		(44)		(28)	%	(100)		(101)		(101)	%
Net income	$	817	$	645	$	172	27	%	$	460	$	357	78	%

Average charged guaranty fee rate on multifamily guaranty book of business	77.5 bps		76.8 bps		0.7 bps		1	%	73.3 bps		4.2 bps		6	%

NM - Not meaningful



Key Business Highlights

•			New multifamily business volume was $16.4 billion in the third quarter of 2021, resulting in $48.8 billion for the first nine months of 2021. The Federal Housing Finance Agency (FHFA) established a 2021 multifamily volume cap of $70 billion, of which 50% must be mission-driven, focused on specified affordable and underserved market segments, and 20% must be affordable to residents earning 60% of area median income or below. Multifamily business that meets the minimum 20% requirement also counts as meeting the minimum 50% requirement. In October 2021, FHFA announced that the multifamily loan purchase cap for 2022 will be $78 billion. As in 2021, a minimum of 50% of loan purchases must be mission-driven, focused on specified affordable and underserved market segments. In addition, 25% of loan purchases must be affordable to residents earning 60% or less of area median income, up from the 20% requirement in 2021.

•			The multifamily guaranty book of business grew by $6.2 billion in the third quarter of 2021 to $408.1 billion. The average charged guaranty fee on the multifamily book increased from 76.8 basis points for the second quarter of 2021 to 77.5 basis points for the third quarter of 2021.

•			Through September 30, 2021, 1.6% of our multifamily guaranty book of business as of March 31, 2020, based on unpaid principal balance, had been in a COVID-19-related forbearance at some point in time. As of September 30, 2021, nearly 90% of the loans in the company’s multifamily guaranty book of business that had received a forbearance, measured by unpaid principal balance, were in a repayment plan or reinstated. Only 0.1% of the multifamily book, or $362 million in unpaid principal balance, was still in active forbearance.

•			The multifamily serious delinquency rate continued to decrease in the third quarter to 0.42% as of September 30, 2021 from 0.53% as of June 30, 2021, driven primarily by the on-going economic recovery resulting in loans that received forbearance completing repayment plans or otherwise reinstating. The multifamily serious delinquency rate, excluding loans that received a forbearance, remained at 0.03% as of September 30, 2021. Multifamily seriously delinquent loans are loans that are 60 days or more past due.


	As of
	September 30, 2021			December 31, 2020

ASSETS
Cash and cash equivalents		$	67,377		$	38,337
Restricted cash and cash equivalents (includes $59,370 and $68,308, respectively, related to consolidated trusts)		66,087			77,286
Federal funds sold and securities purchased under agreements to resell or similar arrangements (includes $27,110 and $0, respectively, related to consolidated trusts)		27,610			28,200
Investments in securities:
Trading, at fair value (includes $5,567 and $6,544, respectively, pledged as collateral)		97,209			136,542
Available-for-sale, at fair value (with an amortized cost of $873 and $1,606, net of allowance for credit losses of $0 and $3 as of September 30, 2021 and December 31, 2020, respectively)		886			1,697
Total investments in securities		98,095			138,239
Mortgage loans:
Loans held for sale, at lower of cost or fair value		7,489			5,197
Loans held for investment, at amortized cost:
Of Fannie Mae		70,936			112,726
Of consolidated trusts		3,831,578			3,546,521
Total loans held for investment (includes $5,301 and 6,490, respectively, at fair value)		3,902,514			3,659,247
Allowance for loan losses		(6,334)			(10,552)
Total loans held for investment, net of allowance		3,896,180			3,648,695
Total mortgage loans		3,903,669			3,653,892
Advances to lenders		9,924			10,449
Deferred tax assets, net		13,128			12,947
Accrued interest receivable, net (includes $9,544 and $9,635, respectively, related to consolidated trusts and net of an allowance of $118 and $216 as of September 30, 2021 and December 31, 2020, respectively)		9,895			9,937
Acquired property, net		1,261			1,261
Other assets		12,163			15,201
Total assets		$	4,209,209		$	3,985,749
LIABILITIES AND EQUITY
Liabilities:
Accrued interest payable (includes $8,563 and $8,955, respectively, related to consolidated trusts)		$	9,299		$	9,719
Debt:
Of Fannie Mae (includes $2,633 and $3,728, respectively, at fair value)		234,843			289,572
Of consolidated trusts (includes $23,020 and $24,586, respectively, at fair value)		3,907,626			3,646,164
Other liabilities (includes $1,233 and $1,523, respectively, related to consolidated trusts)		15,268			15,035
Total liabilities		4,167,036			3,960,490
Commitments and contingencies (Note 13)		—			—
Fannie Mae stockholders’ equity:
Senior preferred stock (liquidation preference of $158,844 and $142,192, respectively)		120,836			120,836
Preferred stock, 700,000,000 shares are authorized—555,374,922 shares issued and outstanding		19,130			19,130
Common stock, no par value, no maximum authorization—1,308,762,703 shares issued and 1,158,087,567 shares outstanding		687			687
Accumulated deficit		(91,123)			(108,110)
Accumulated other comprehensive income		43			116
Treasury stock, at cost, 150,675,136 shares		(7,400)			(7,400)
Total stockholders’ equity (See Note 1: Senior Preferred Stock Purchase Agreement and Senior Preferred Stock for information on the related dividend obligation and liquidation preference)		42,173			25,259
Total liabilities and equity		$	4,209,209		$	3,985,749


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,

	2021			2020			2021			2020
Interest income:
Trading securities		$	134		$	177		$	396		$	712
Available-for-sale securities		11			19			48			76
Mortgage loans		24,798			25,810			73,083			81,755
Federal funds sold and securities purchased under agreements to resell or similar arrangements		5			14			17			135
Other		33			33			106			92
Total interest income		24,981			26,053			73,650			82,770
Interest expense:
Short-term debt		—			(19)			(4)			(175)
Long-term debt		(18,009)			(19,378)			(51,646)			(64,815)
Total interest expense		(18,009)			(19,397)			(51,650)			(64,990)
Net interest income		6,972			6,656			22,000			17,780
Benefit (provision) for credit losses		937			501			4,290			(2,094)
Net interest income after benefit (provision) for credit losses		7,909			7,157			26,290			15,686
Investment gains, net		243			653			934			644
Fair value gains (losses), net		(17)			(327)			321			(1,621)
Fee and other income		111			93			301			303
Non-interest income (loss)		337			419			1,556			(674)
Administrative expenses:
Salaries and employee benefits		(376)			(386)			(1,128)			(1,161)
Professional services		(184)			(230)			(582)			(673)

Other administrative expenses		(185)			(146)			(529)			(431)
Total administrative expenses		(745)			(762)			(2,239)			(2,265)
Foreclosed property expense		(69)			(71)			(105)			(161)
Temporary Payroll Tax Cut Continuation Act of 2011 (“TCCA”) fees		(781)			(679)			(2,270)			(1,976)
Credit enhancement expense		(233)			(325)			(791)			(1,061)
Change in expected credit enhancement recoveries		(42)			(48)			(117)			413
Other expenses, net		(268)			(313)			(867)			(792)
Total expenses		(2,138)			(2,198)			(6,389)			(5,842)
Income before federal income taxes		6,108			5,378			21,457			9,170
Provision for federal income taxes		(1,266)			(1,149)			(4,470)			(1,935)
Net income		4,842			4,229			16,987			7,235
Other comprehensive loss:
Changes in unrealized losses on available-for-sale securities, net of reclassification adjustments and taxes		(10)			(11)			(64)			(4)
Other, net of taxes		(4)			(2)			(9)			(7)
Total other comprehensive loss		(14)			(13)			(73)			(11)
Total comprehensive income		$	4,828		$	4,216		$	16,914		$	7,224
Net income		$	4,842		$	4,229		$	16,987		$	7,235
Dividends distributed or amounts attributable to senior preferred stock		(4,828)			(4,216)			(16,914)			(7,224)
Net income attributable to common stockholders		$	14		$	13		$	73		$	11
Earnings per share:
Basic		$	0.00		$	0.00		$	0.01		$	0.00
Diluted		0.00			0.00			0.01			0.00
Weighted-average common shares outstanding:
Basic		5,867			5,867			5,867			5,867
Diluted		5,893			5,893			5,893			5,893


Third Quarter 2021 Results						1


Third Quarter 2021 Results						2


Third Quarter 2021 Results						3


Third Quarter 2021 Results						4