Fannie Mae reported net interest income of $5.1 billion in the first quarter, over half of which came from guarantee fees rather than its investment portfolio.
"This is the first time we have disclosed that a majority of our revenues have come from our guarantee fees, a trend that we would expect to continue over time," said Timothy Mayopoulos, Fannie's chief executive officer, during a conference call.
G-fees on single family loans totaled $3 billion in the first quarter, up from $2.9 billion a year ago, according to Fannie. Such income has been slowly rising after the Federal Housing Finance Agency began hiking G-fees at the same time that it ordered Fannie Mae and Freddie Mac to reduce mortgage portfolio income.
Fannie's mortgage investment portfolio dropped to $411.7 billion as of March 31 from $597.8 billion two years ago.
Overall, Fannie posted $1.9 billion in net income in the first quarter, up from $1.3 billion a quarter earlier.
"This was another quarter of strong financial performance. We continue to have solid revenues," Mayopoulos said.
In the first quarter, Fannie purchased $113.2 billion in single-family loans, up slightly from the quarter prior and a jump of 48% from a year ago.
Mayopoulos added that Fannie is continuing to work with lenders, the Mortgage Bankers Association and FHFA to provide more clarity on representation and warranty risk. The changes announced last year in that area are already having an impact, he said. "These changes to the rep and warrant framework are very much welcomed and appreciated" by lenders, Mayopoulos said. "It has encouraged many lenders to adjust or take off their overlays."
The Fannie CEO also noted that the government-sponsored enterprise has added an appraisal analysis application and a pre-delivery eligibility and data evaluation tool into Desktop Underwriter.
"The integration of these applications has allowed lenders to effectively manage their risk and product very solid loans," he said.
Fannie Mae is still operating in conservatorship and it will pay a $1.8 billion dividend to the Treasury Department in June.
