Federal Home Loan Mortgage Corp (OTCMKTS:FMCC) and Federal National MortgageAssociation (OTCMKTS:FNMA) both have been down over 30% in a three-month period recently. However, these two companies recently had news that could potentially cause them to rebound. Now, before we get into the news, let’s take a look at these developments, starting with FNMA.
Federal National Mortgage Association, also known as Fannie Mae, recently had some developments that could potentially send shares higher. Fannie Mae recently announced the sale of non-performing loans. Now, according to the company, “The three larger pools of approximately 3,600 loans totaling $613 million in unpaid principal balance (UPB) and the Community Impact Pools of approximately 135 loans, focused in the New York and New Jersey areas, totaling $34.47 million in UPB, are available for purchase by qualified bidders. This sale of non-performing loans is being marketed in collaboration with Wells Fargo Securities, LLC and The Williams Capital Group, L.P., as advisors.”
Mortgage rates have been continuing to hold, and 30-year fixed-rate mortgage averaged 4.05%, 15-year fixed rate mortgage averaged 3.29% and 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18%, recently. That in mind, Federal Home Loan Mortgage Corp (OTCMKTS:FMCC) and Federal National Mortgage Association (OTCMKTS:FNMA) could potentially benefit from these rates.
Getting back to company news. Fannie Mae also announced the third sale of reperforming loans. Fannie Mae recently started to sell its reperforming loans as part of its efforts to reduce the size of its retained mortgage portfolio. That in mind, the pool has approximately 13,700 loans, totaling over $3B in unpaid principal balance, and is now available for purchase by qualified bidders.
Moreover, Fannie Mae recently reported its first quarter 2017 financial results. FNMA reported net income of $2.8B for the quarter and reported a positive net worth of $3.4B for the quarter ended on March 31, 2017. According to Timothy J. Mayopoulos, Fannie Mae president and chief executive officer, “Across our business, we are creating new ways to help our customers make the mortgage process easier and safer, and provide options that are affordable to more borrowers.”
Mayopoulos added, “Both the market and our operations continued to strengthen, and our progress was reflected in another profitable quarter. We look forward to advancing our vision to create a digital mortgage process, and make new strides in our efforts to encourage the creation of affordable multifamily housing.”
Let’s get into some company news on Freddie Mac now. Freddie Mac recently priced a new offering of Structured Pass-Through Certificates worth around $1.2B, which are backed by floating-rate multifamily mortgages with primarily 10-year terms.
Additionally, Federal Home Loan Mortgage Corp (OTCMKTS:FMCC) recently announced that it obtained its third insurance policy of the year under its Agency Credit Insurance Structure program. That said, the company has a little less risk and provides a combined maximum limit of approximately $440M of losses on single-family loans. According to the company, it “transfers a large portion of the credit risk on Structured Agency Credit Risk (STACR) debt notes, STACR 2017-DNA2. This transaction transferred a portion of mortgage credit risk on approximately $60.7 billion of unpaid principal balance (UPB) on single-family mortgages.”
With these developments in both FNMA and FMCC, you might want to keep an eye on the any potential catalysts in the name that could cause it to rise. Now these company developments could cause FNMA and FMCC to rise, but some may be already late to the party. However, you can be ready for the next time these companies release any news. All you have to do is enter your email address into the box below, and you’ll be subscribed to our free newsletter, and thereafter, we’ll send you updates, if any, on FMCC and FNMA.
Disclosure: No one at Street Register has been compensated in any way for the publishing of this article, nor do we hold any position in FMCC or FNMA stock, short or long.