Federal National Mortgage Association

What they do

Fannie Mae buys single-family (four or fewer units) and multifamily (five or more units) residential mortgage loans from lenders and packages them into Fannie Mae MBS, which it guarantees against borrower default. It does not originate loans or lend directly to borrowers; instead, it earns guaranty fees for assuming credit risk. As of March 31, 2026, it owned or guaranteed an estimated 24% of single-family and 22% of multifamily U.S. mortgage debt outstanding.

Revenue drivers

• Single-Family guaranty fees — Earns base and deferred guaranty fees on single-family loans; this is the largest source of guaranty fee income, with the single-family average guaranty book at $4,105 billion in 2Q26.
• Multifamily guaranty fees — Earns guaranty fees on multifamily loans; average multifamily guaranty book was $543 billion in 2Q26, with fee income of $0.35 billion (based on the chart data).
• Net interest income from portfolios and hedge impact — Generates interest income on retained mortgage-related assets and corporate liquidity portfolio, plus net interest from base guaranty fees; combined with TCCA, this totaled $7.49 billion in 2Q26.

Recent performance

In 2Q26, net income was $4.0 billion, up $665 million from 2Q25, driven by a $461 million decrease in provision for credit losses, a $324 million increase in net revenues, and a $265 million decrease in non-interest expense, partially offset by a $287 million swing from fair value gains to losses. Net revenues were $7.6 billion, up 4% year-over-year. Provision for credit losses was $485 million, split $226 million single-family and $259 million multifamily. Net worth rose to $116.5 billion at quarter-end, up 14.7% from a year ago. For the first half of 2026, the company provided $241.2 billion in liquidity to the mortgage market, enabling about 802,000 home purchases, refinancings, and rental units.

Strategy

Management emphasizes disciplined execution and mission performance, focusing on improving affordability and efficiency through initiatives such as advanced appraisal alternatives and updated property insurance and condominium requirements. It continues to enhance market transparency with the launch of the Purchase Application-Level Index. The company transfers credit risk to third parties through credit risk transfer and mortgage insurance to manage its credit exposure. It remains committed to supporting both single-family and multifamily housing markets while operating under conservatorship and Treasury agreements that restrict activities.

Risks

• Conservatorship and GSE risk — Since 2008, FHFA has been conservator; the Board's fiduciary duties run solely to FHFA, and conservatorship plus Treasury agreements significantly restrict business activities and stockholder rights.
• Interest rate risk — Higher rates reduce refinancing, slowing prepayments and lowering deferred guaranty fee income; conversely, lower rates increase prepayments, but most loans have rates below prevailing levels, limiting fee acceleration.
• Credit risk on mortgages — Provision for credit losses was $485 million in 2Q26, with multifamily pressure from weaker property valuations and slower net operating income growth; single-family provision driven by new loans and delinquencies.
• Home price and macroeconomic risk — Home price growth affects credit losses; actual home price growth provided a benefit in 2Q26, but slower growth or declines could increase provisions and hurt financial results.

Outlook

Management does not provide specific forward guidance, but expects interest rates and home prices to influence prepayment speeds, credit losses, and net interest income. The company notes that many loans have rates below current prevailing levels, so refinancing behavior may be limited unless rates drop sufficiently. Multifamily credit performance faces headwinds from weaker property valuations and slower NOI growth. The company remains focused on fulfilling its mission while navigating conservatorship constraints.