2024-05-06 11:30:30 ET
Summary
- The Federal National Mortgage Association aka Fannie Mae's primary revenue comes from insuring the risk of owner default on single-family and multifamily homes.
- Fannie reinsures a lot of its credit risk with private mortgage insurers, other insurers and bond investors.
- Low current losses are due to conservative underwriting, a healthy housing market, low unemployment and low mortgage debt payments.
- I expect only modest credit cost increases over the next 5 years.
- Investors valuing Fannie should assume stable to modestly increasing earnings from the current $17 billion annual base.
I start with a warning label that I will not present a view on a privatization of Federal National Mortgage Association aka Fannie Mae (FNM). I do not have any information of interest on this topic. And I learned over my stock analyst career that guessing on political and legal outcomes is generally a fool’s game....
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For further details see:
Fannie Mae The Mortgage Insurer: Long-Term Trends