Fannie Mae Q1 Earnings Call Highlights

Key Points

• Fannie Mae reported Q1 2026 net income of $3.7 billion on net revenues of $7.3 billion, lifting net worth to $112.7 billion and an illustrative return on required equity of 10.4%, underscoring the strength of its guarantee business.
• The company provided $116 billion of liquidity in the quarter—helping about 385,000 households buy, refinance, or rent—and supported foreclosure prevention for over 24,000 homeowners, while enabling immediate use of VantageScore 4.0 to expand credit access.
• Cost-reduction measures drove non-interest expense down 8% QoQ and 16% YoY with the administrative expense ratio falling to 10.2%, but multifamily credit stress increased, including $188 million in net charge-offs and higher provisions for credit losses.

Fannie Mae OTCMKTS: FNMA reported first-quarter 2026 net income of $3.7 billion, supported by stable net revenues and lower expenses, as the company said it continues to monitor heightened macroeconomic uncertainty and evolving housing market conditions.

Acting Chief Executive Officer and Chief Operating Officer Peter Akwaboah said the company “opened the year strong,” with net income up 5% from the prior quarter and up 2% from a year earlier. Akwaboah said the performance “reflects the sustained health of our guaranteed business, the discipline of our execution, and the strength of our balance sheet,” and pushed net worth to $112.7 billion.

Mission activity and operational updates

Akwaboah emphasized Fannie Mae’s role in providing liquidity “in all economic cycles” and said the company made progress on several priorities during the quarter, including expense management and support for the secondary mortgage market.

According to Akwaboah, Fannie Mae provided $116 billion of liquidity in the first quarter, helping about 385,000 households buy, refinance, or rent. He also said foreclosure prevention solutions helped more than 24,000 homeowners remain in their homes.

On technology and process initiatives, Akwaboah said the company delivered “targeted process and technology updates” and, since quarter end, enabled two new credit score models, including “immediate use of VantageScore 4.0,” which he said is intended to support affordability and access through “innovation and competition.”

Financial results and revenue mix

Chief Financial Officer Chryssa C. Halley said market volatility increased toward the end of the quarter but did not materially affect first-quarter results. She added that the company is “closely monitoring factors that could influence the credit performance of our guarantee book,” and said Fannie Mae’s credit profile, net worth, and risk management “position us to manage through periods of increased uncertainty.”

Halley reported net revenues of $7.3 billion and said the core guarantee business drove results. Guarantee fee revenue totaled $5.9 billion, accounting for 81% of net revenues, which Halley described as fees earned in exchange for providing credit protection on mortgage-backed securities issued in the secondary market.

Halley also pointed to “other losses” during the quarter, which she said were driven by investment losses on purchases of Fannie Mae mortgage-backed securities for the retained mortgage portfolio. The company recorded a $277 million provision for credit losses that included both single-family and multifamily components.

For a capital-efficiency view, Halley cited an “illustrative return on required equity” of 10.4%, up 20 basis points from the prior quarter.

Expenses and efficiency initiatives

Halley said the quarter benefited from lower non-interest expense as cost reduction actions translated into savings. Non-interest expense fell 8% quarter-over-quarter and 16% year-over-year, and the administrative expense ratio declined to 10.2% from 12.6% in the fourth quarter of 2025.

She added that first-quarter administrative expense was 19% lower quarter-over-quarter and 25% lower year-over-year, attributing the change to actions that reduced the workforce, spending on contractors and consultants, and the company’s real estate footprint. Halley said Fannie Mae aims to sustain a smaller cost base through “operational efficiency,” including automating manual processes and “increasing productivity with AI.”

Credit performance: single-family stability, multifamily pressure

On credit metrics, Halley said single-family credit performance was “relatively stable” compared with the prior quarter and that the single-family serious delinquency rate remained “near historically low levels.”

In multifamily, Halley reported that the serious delinquency rate increased as more loans became seriously delinquent amid “sustained market challenges in recent periods.” She said the multifamily allowance declined by $14 million, reflecting $188 million in net charge-offs that pushed the net charge-off ratio seven basis points higher, largely offset by a $174 million provision for credit losses “primarily driven by an increase in loan delinquencies and weakened property valuations on certain problem loans.”

For single-family, Halley said the allowance rose $14 million, with $89 million in net charge-offs more than offset by a $103 million provision for credit losses.

Business segment highlights and balance sheet positioning

Halley described the guarantee business as large and stable, anchored by a $4.1 trillion guarantee book. She said that at the end of 2025, Fannie Mae remained the largest guarantor of residential mortgage debt outstanding in the U.S., backing an estimated 24% of single-family and 21% of multifamily mortgage debt outstanding.

In single-family, Halley said the business acquired $99 billion of loans in the first quarter—the highest quarterly volume since 2022—and generated $6 billion in net revenues. She said base guarantee fee revenue was relatively stable, with repricing higher offsetting book declines, but noted that an $86 million increase in hedge accounting expenses contributed to slightly lower net revenues quarter-over-quarter.

Halley said single-family acquisition credit characteristics remained strong, with weighted average FICO stable at 757 and weighted average original loan-to-value declining slightly due to a higher share of refinance acquisitions. She added that the share of acquisitions with debt-to-income ratios above 43% declined to 34%, down two percentage points from 2025 levels, which she attributed to more refinance activity.

In multifamily, Halley said the company delivered $17 billion in new business volume and grew the multifamily guarantee book to $542 billion. While multifamily guarantee fee revenue was relatively stable, she said multifamily net income fell quarter-over-quarter and year-over-year due to a higher provision for credit losses and a shift from other gains to other losses. Halley also said that nearly all of the multifamily guarantee book had “some form of credit protection” at quarter end due to the DUS risk-sharing model and credit risk transfer programs.

On balance sheet management, Halley said Fannie Mae grew its retained mortgage portfolio by $36 billion and reduced the corporate liquidity portfolio by $7 billion, describing this as a shift toward higher-yielding investments. She also said the company increased long-term debt issuance to replace maturing debt later in the year and to enhance liquidity by taking advantage of “favorable market conditions.”

In closing, Halley said the quarter “underscores the strength of our business model,” pointing to the guarantee book, a “leaner cost structure,” and a “strong and growing net worth position” as factors that she said leave the company positioned to navigate market challenges while continuing to support the U.S. housing market.

About Fannie Mae OTCMKTS: FNMA

The Federal National Mortgage Association, commonly known as Fannie Mae OTCMKTS: FNMA, is a government-sponsored enterprise established by Congress in 1938 as part of the New Deal to support the U.S. housing market. Headquartered in Washington, DC, Fannie Mae's mission is to promote liquidity, stability and affordability in the mortgage market. The company operates by purchasing residential mortgage loans from financial institutions, pooling them into mortgage-backed securities (MBS), and providing guarantees to investors against borrower default.

In its core business, Fannie Mae works with mortgage lenders across the United States—including banks, credit unions and mortgage finance companies—to ensure a steady flow of capital for homebuyers and homeowners seeking refinancing.

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