After posting a net loss of $6.5 billion and a comprehensive loss of $6.7 billion in the fourth quarter of 2017—due to its deferred tax assets resulting from the enactment of last year’s tax legislation—Fannie Mae reported net income of $4.3 billion and comprehensive income of $3.9 billion for the first quarter of 2018.
Two primary factors drove the difference between the net income in the first quarter of 2018 and the net loss in the fourth quarter of 2017, Fannie Mae says: a $9.9 billion provision for federal income taxes in the fourth quarter that resulted from the enactment of the Tax Cuts and Jobs Act of 2017; and net fair-value gains of $1 billion in the first quarter.
On the multifamily side, Fannie Mae's new business volume declined in 1Q 2018, to $11.3 billion, an amount the company says nonetheless enabled the financing of 154,000 units of housing. In the fourth quarter of 2017, the government-sponsored enterprise (GSE) completed $20.3 billion in multifamily financing.
Approximately 38% of Fannie’s first-quarter multifamily new business volume counted toward the Federal Housing Finance Agency’s 2018 multifamily volume cap. More than 90% of the multifamily units the company financed were affordable to families earning at or below 120% of the area median income, providing support for both affordable and workforce housing.
Multifamily pre-tax income was $695 million in the first quarter, compared with $693 million in the fourth quarter of 2017. Pre-tax income in the first quarter was driven by net interest income, which primarily consists of guaranty fee revenue, and fee and other income, driven by yield maintenance.
The company’s multifamily guaranty book of business continued to grow in the first quarter, while the average charged guaranty fee on the multifamily guaranty book remained relatively flat compared with year end, at 79 basis points as of March 31.
Through Fannie Mae’s single-family and multifamily business segments, the GSE provided $124 billion in liquidity to the mortgage market in the first quarter of 2018, which enabled the financing of 638,000 home purchases, refinancings, or rental units, according to the company.
“We continue to drive advances in the housing finance system, providing our customers with reliable, sustainable, and innovative solutions to address America’s housing needs,” said Timothy J. Mayopouls, president and CEO, in a statement. “We are dedicated to working with our customers to solve the housing challenges of today and tomorrow, and enabling them to deliver real benefits and more opportunities to home buyers and renters.”
