As of June 30, 5.7 percent of the single-family loans guaranteed by Fannie Mae were in forbearance, down from the 7 percent that was in forbearance at the end of the first quarter, according to the company earnings released Thursday. The vast majority of the 972,000 loans in forbearance were related to COVID-19, according to the company.
“During this time of economic uncertainty, Fannie Mae is a force for stability, affordability, and liquidity in the housing markets,” Fannie Mae CEO Hugh Frater, said in a statement.
Much of the company’s focus in the second quarter was on mitigation measures to lessen the impact that COVID-19 had on homeowners, which included the suspension of foreclosures and foreclosure-related evictions, as well as eliminating late fees on homeowners in forbearance and offering payment plan and loan modification options.
“In the second quarter, we helped hundreds of thousands of homeowners and renters get the guidance and support they needed to stay in their homes, while we delivered on record refinancing demand,” Frater said. “Fannie Mae will continue to work with partners across the industry to fulfill our mission and our leadership role in housing finance.”
Overall, the government-sponsored entity reported a net income of $2.5 billion in the second quarter, a huge increase over the $461 million it reported in the first quarter of 2020 but lower than the $3.4 billion it posted in the second quarter of 2019.
The quarter-to-quarter increase was fueled by a decrease in credit-related expenses. In the first quarter, the company had set aside more money for loan losses due to COVID-19. That allowance remained mostly flat in the second quarter.
The company’s overall net worth spiked to $16.5 billion at the end of the second quarter, and per its conservatorship with the U.S. Department of the Treasury, Fannie Mae can retain quarterly earnings until its net worth hits $25 billion.
The data from Fannie Mae shows a steadying housing market, with fewer loans in forbearance and earnings returning closer to last year’s levels, after the first quarter’s significant drop-off. At the end of the first quarter, the company had advised that it expected the number of loans in forbearance to rise, but the opposite occurred.
Still, despite the positive news for the housing market, economic data from the U.S. Department of Commerce showed real gross domestic product in the U.S. dropped 32.9 percent in the second quarter.