Fannie Mae already has 1 million mortgages in forbearance, but thinks that number may double
Federal Housing Finance Agency Director Mark Calabria told HousingWire last month that his expectation was that approximately 1 million GSE mortgages would be in forbearance by May, but as the calendar flipped to May, it appears that Calabria undershot that projection by a sizable margin.
As it turns out, there are approximately 1 million GSE mortgages now in forbearance…at Fannie Mae alone.
Fannie Mae revealed Friday that more than 1 million of its borrowers (approximately 7% of the mortgages in its portfolio) are already in forbearance, but the GSE doesn’t expect that figure to stop growing any time soon.
In fact, the GSE said Friday that the number of borrowers in forbearance could double in the coming weeks.
“While we estimate that approximately 7% of loans in our single-family book have taken forbearance so far, our allowance in the quarter reflects uptake of 15%,” Fannie Mae Chief Financial Officer Celeste Brown said on a call with investors. “Uptake could be higher if economic conditions are worse than our forecast.”
That increase in forbearance drove the GSE’s profits down considerably in the first quarter. The GSE reported Friday that its net income was $461 million in the first quarter, down nearly $4 billion from its fourth quarter profit of $4.365 billion. In the first quarter of last year, Fannie Mae reported net income of $2.4 billion.
“The decrease in net income was due primarily to a shift from credit-related income to credit-related expense driven by the economic dislocation caused by the COVID-19 outbreak,” the GSE said in its earnings release.
“The company increased its allowance for loan losses to reflect the losses it currently expects to incur, including $4.1 billion as a result of the economic disruption caused by the COVID-19 outbreak, which are reflected in its $2.7 billion of credit-related expenses for the quarter,” the company added.
Despite that, the company said that it provided “$204.6 billion in liquidity to the mortgage market in the first quarter of 2020, helping families across the country to own or rent a home through the financing of approximately 854,000 home purchases, refinancings, and rental units.”
And in a statement, Fannie Mae CEO Hugh Frater said the company will continue to help people secure a place to live throughout this crisis and beyond.
“Fannie Mae is committed to fulfilling its vital role in helping our customers, our servicers, and the market as a whole manage through this period of uncertainty,” Frater said.
“We recognize that more work lies ahead to help borrowers, renters, and the housing market recover.” Frater added. “I want to give special thanks to the people of Fannie Mae, who have stepped up to their mission with characteristic grit and humility, and with their rock-solid commitment to provide a sound foundation for our country’s housing market.”
The post Fannie Mae already has 1 million mortgages in forbearance, but thinks that number may double appeared first on HousingWire.