Fannie Mae Q2 Earnings Call Highlights

Key Points

• Net income rose to $4 billion in Q2 2026, up 7% sequentially and 20% year over year, while net revenues increased 4% to $7.6 billion. Results benefited from stronger guaranty revenue and lower non-interest expenses despite higher credit-loss provisions.
• The core guaranty business generated nearly 80% of revenue, with more than $6 billion in guarantee-fee revenue. Single-family acquisitions reached $111 billion, the highest quarterly volume since Q3 2022, while the average guaranty book grew to $4.1 trillion.
• Credit pressure persisted in multifamily lending: Fannie Mae increased its credit-loss allowance by $161 million, driven largely by weaker property valuations, slower income growth and rising delinquencies. The company also issued $25 billion of debt and ended the quarter with net worth above $116 billion.

Fannie Mae OTCMKTS: FNMA reported second-quarter 2026 net income of $4 billion, up 7% from the first quarter and 20% from a year earlier, as growth in net revenues and lower non-interest expenses more than offset a higher credit-loss provision.

Net revenues rose 4% sequentially to $7.6 billion. Acting Chief Executive Officer and Chief Operating Officer Peter Akwaboah said the company’s results reflected “the durability of our guaranty business, the resilience of our balance sheet, and the disciplined execution of our strategy.” Fannie Mae ended the quarter with net worth exceeding $116 billion.

The company said it provided $125 billion in liquidity to the mortgage market during the quarter, serving approximately 417,000 households. That total included nearly 110,000 first-time homebuyers. Fannie Mae also said its foreclosure-prevention activities helped more than 21,000 homeowners remain in their homes.

Guaranty Business Drives Revenue

Chief Financial Officer Chryssa C. Halley said the core guaranty business represented nearly 80% of total net revenues during the quarter. Fannie Mae’s average guaranty book stood at $4.1 trillion and generated more than $6 billion in guarantee-fee revenue, an increase of $117 million from the first quarter.

Halley said the increase was primarily driven by single-family deferred guarantee-fee income. She noted that elevated loan prepayments late in the first quarter, stemming from lower mortgage rates, can lead to higher deferred fee income in later periods after mortgage-backed securities holders are repaid.

Portfolio income increased 12% from the first quarter, reflecting growth in the retained mortgage portfolio and corporate liquidity portfolio. Year-to-date net interest margin increased to 68.6 basis points, its highest level since 2022, according to the company.

Fannie Mae’s single-family business recorded $111 billion in acquisitions during the second quarter, its highest quarterly volume since the third quarter of 2022. Purchase acquisitions increased during the spring homebuying season, while refinance activity slowed as mortgage rates increased during the quarter.

The company’s single-family guaranty book totaled $3.6 trillion. Single-family net revenues increased 4% from both the first quarter and the prior-year period, supported by higher deferred guarantee-fee income and the ongoing repricing of the guaranty book. Single-family net income was $3.3 billion, up 3% sequentially.

Fannie Mae said the weighted average original loan-to-value ratio on second-quarter single-family acquisitions was 77%, unchanged from the first quarter, while the weighted average FICO score was 756.

Multifamily Earnings Rise Despite Credit Pressure

The multifamily business produced $14 billion in new business volume and grew its guaranty book to $545 billion. Net revenues increased 2% from the first quarter, though Fannie Mae said higher mortgage rates and competitive pressures constrained new business volumes.

Multifamily net income rose 29% sequentially to $704 million. Lower non-interest expense and lower fair-value losses more than offset higher provisions for credit losses, according to Halley.

The company said multifamily market challenges continued to generate new delinquencies, although the multifamily serious delinquency rate declined during the quarter, primarily due to a recent loan portfolio modification and foreclosure activity. Management said it expects ongoing multifamily market challenges to result in additional delinquencies.

Fannie Mae increased its total allowance for credit losses by $161 million. The single-family allowance rose $59 million, reflecting new acquisitions and newly delinquent loans, partly offset by improved actual home prices. The multifamily allowance increased $102 million, with the provision driven primarily by weaker property valuations, slower net operating income growth and loans becoming seriously delinquent.

• Single-family net charge-offs were $167 million, with a $226 million credit-loss provision.
• Multifamily net charge-offs were $157 million, with a $259 million credit-loss provision.

Halley said nearly all of the multifamily guaranty book had some form of credit protection at quarter-end through Fannie Mae’s Delegated Underwriting and Servicing risk-sharing model and credit-risk transfer programs.

Expenses, Capital and Interest-Rate Management

Total non-interest expense declined 5% from the first quarter and 11% from a year earlier. Administrative expenses increased 9% sequentially, including $56 million of costs related to reducing Fannie Mae’s real estate footprint and severance expenses. Still, administrative expenses were 4% below the year-earlier period and 10% below the second quarter of 2024.

The company reported an administrative expense ratio of 10.7%, remaining below quarterly levels recorded from 2023 through 2025. Its illustrative return on required equity was 10.8%, up 40 basis points from the prior quarter.

Fannie Mae issued $25 billion of debt during the quarter to replace debt scheduled to mature later in the year and support balance-sheet growth, including purchases of U.S. Treasury securities. Under its updated interest-rate risk-management strategy, the company has increased exposure to longer-term rate positions, including Treasury securities classified as available for sale.

The available-for-sale investment portfolio recorded $150 million in net unrealized losses during the quarter due to movements in long-term interest rates. Those losses were reflected in total comprehensive income.

Operational Initiatives and Borrower Support

Akwaboah said Fannie Mae maintained an administrative expense ratio below 11% this year as its operational efficiency initiative reached its one-year mark. He also highlighted updates to property-insurance requirements, including condominium policy changes intended to address affordability and insurance availability while maintaining risk-management standards.

The company said appraisal alternatives helped more than 76,000 households reduce appraisal-related closing costs in the second quarter, producing an estimated $45 million in savings. Cumulative estimated savings from appraisal alternatives since 2018 exceeded $3 billion, according to Fannie Mae.

In June, the company launched its Purchase Application-Level Index, or PALI, which it said provides timely insights into prospective home-purchase activity and complements its existing refinance index.

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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