Fannie Mae Q3 earnings slide as lower home prices lead to higher credit expense

Win McNamee

Fannie Mae's (OTCQB:FNMA) Q3 earnings dropped both Q/Q and Y/Y as the mortgage giant's credit expense jumped, driven by lower actual and projected home prices, the company said Tuesday.

Q3 total comprehensive income of $2.43B sank 48% from Q2 and fell 50% from a year ago. Net worth of $58.8B rose 4% Q/Q and 40% Y/Y.

Q3 net revenue of $7.23B slipped 8% Q/Q and increased 2% Y/Y. Q3 net interest income of $7.12B dropped 9% Q/Q and rose 2% Y/Y.

Credit-related expense of $2.52B surged from $251M in Q2 and compared with a credit-related gain of $868M in Q3 2021.

Fair value gain of $292M dropped 237% Q/Q and compared with a fair value loss of $17M in the year-ago quarter.

Administrative expenses of $870M declined 9% Q/Q and 17% Y/Y.

Single-family conventional acquisition volume was $117.7B in Q3 2022, down 32% from Q2. Purchase acquisition volume fell to $92.2B in Q3, of which more than 45% was for first-time homebuyers, from $111.0B in Q2. Refinance acquisition volume was $25.5B in Q3, down from $61.3B in the prior quarter, as the higher mortgage interest rate environment lowered demand for refinancing.

Credit quality remained strong, with single-family serious delinquency rate dropping to 0.69% in Q3 from 0.81% in Q2 and from 1.62% in Q3 2021. The multifamily serious delinquency rate slipped to 0.26% in the most recent quarter vs. 0.34% in the prior quarter and 0.42% in the year-ago period.

Conference call at 8:00 AM ET.

Earlier, Fannie Mae (OTCQB:FNMA) reports Q3 results