Mortgage finance giant,Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA), has given the clearest of indications that it expects its earnings to decline in the near future having experienced a turbulent run in the fourth quarter. Under the bailout package of 2008, Fannie Mae plans to make a payment of $1.9 billion in March to the Treasury, which would bring its total dividend pay to $136.4 billion.
Despite the raised future earnings concerns, the fourth quarter was Fannie Mae’s 12th straight profitable quarter. Fannie Mae and Freddie Mac profits for last year were mostly affected by a decline in long-term interest rates that kick started losses in derivatives. Freddie Mac having posted a net income of $227 million for the fourth quarter plans to make a dividend pay of $900 million in March.
Both mortgage magnets are required to channel almost all of their profits to the Treasury in the form of dividends, having been rescued from a point of near collapse in the apex of the financial crisis. Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) aw its profit slip to a low of $1.31 billion in the recent quarter down from a high of$6.46 billion a year earlier. The mortgage giant still expects to remain profitable on a yearly basis, but income would be lower mostly as a result of resolution agreements as well as lower credit related income.
Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) saw its net revenue for the fourth quarter slip to $5.47 billion from $6.99 billion a year earlier with net interest income on the other hand surging to $5.1 billion from $4.85 billion. The company has also seen its single-family serious delinquency rate drop to 1.89% from a high of 1.96% the previous quarter, having been on the declining trend for the past 19 consecutive quarters. Credit related income also dropped to $97 million from $1.08 billion a year earlier.