MReport April 2018

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TH E M R EP O RT | 61 S E R V I C I N G D ATA G O V E R N M E N T O R I G I NAT I O N S E C O N DA R Y M A R K E T SECONDARY MARKET SECONDARY MARKET Just Better Closings Pavaso's Digital Close Swap out stacks of paper for a better consumer experience • eDeliver, eClosing, eNotary, eVault • Epic consumer experience • Save hundreds per loan • Audit & QA reports for compliant closings • One secure portal for all parties • Automated status updates Get started (866) 288-7051 | "Our focus is on building a strong, stable housing finance system for the future." — Timothy Mayopoulos, President and CEO, Fannie Mae Fundamentals Remain Strong Despite weak financial results, Fannie Mae has provided $570 billion to the mortgage market. F annie Mae posted major losses for the fourth quarter of 2017. It also posted an annual revenue in 2017 that was nearly $10 billion down from 2016. By the end of Q 4, Fannie posted a drop of $3.7 billion in overall net worth and a loss of $6.5 billion. The GSE's net income in 2017 was $2.5 billion, down from $12.3 billion the year before. Pre-tax, however, those numbers work out to $18.4 billion in 2017, compared to $18.3 billion in 2016. In a statement, Fannie President and CEO Timothy Mayopoulos said, "Our 2017 results demonstrate that the fundamentals of our business are strong. While the fourth quar - ter was affected by a one-time accounting charge, we expect to benefit from a lower tax rate going forward." Fannie still has nearly $4 billion to make up, and the agency is expected to ask for gov - ernment assistance for the first time since 2012. According to Bloomberg, Fannie's shortfall is the "unintended, but anticipated side effect of the corporate tax cut signed into law in December." What this refers to is a drop in the value of the GSE's assets, which became less valuable—and, therefore, less able to offset taxes—when Congress cut the corpo - rate tax rate, "resulting in a $9.9 billion hit." However, Fannie's business, Mayopoulos said, is essentially stable. According to its Q 4 statement, an agreement Fannie made with the Treasury in December increased the applicable capital reserve amount to $3 billion as of January 1 and reduced the dividend amount otherwise payable for the fourth quarter of 2017 by $2.4 billion. Fannie Mae also reported providing approx - imately $570 billion in liquidity to the mortgage market in 2017 and said it was the most significant issuer of single-family mortgage- related securities in the secondary market in the fourth quarter and full year of 2017. The company's estimated market share of new single-family mortgage-related securities issuances was 39 percent for the full year of 2017 and 37 percent for Q 4 2017. "Our focus is on building a strong, stable housing finance system for the future," Mayopoulos said. "We are doing this by delivering innovative solutions for our customers and demonstrating leadership on our country's most persistent housing challenges."

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