On Thursday FanniernMae reported net income of $1.9 billion and comprehensive income of $1.8rnbillion for the first quarter of 2015 compared to net income of $1.3 billionrnand comprehensive income of $1.34 billion in the fourth quarter of 2014.  Net income increased due primarily tornlower fair value losses in the first quarter of 2015.</p

Net interest income, which includesrnguaranty fee revenue, was $5.1 billion for both the first quarter of 2015 and the fourth quarter of 2014.rnNet interest income in the first quarter was driven by guaranty fee revenue,rnincluding amortization income from prepayments, and interest income earned onrnmortgage assets in the company’srnretained mortgage portfolio. Therncompany expects that guaranty fees will continue to accountrnfor an increasing portion of its net interestrnincome both because of the impact of guaranty fee increases and thernshrinking of the retained mortgage portfolio.</p

The company reported a positive netrnworth of $3.6 billion as of Marchrn31, 2015.  As a result it will pay a dividendrnto the U.S. Treasury of $1.8 billion in June. rnThe June payment will bring the total of dividends the company has paidrnto $138.2 billion.  </p

The single family serious delinquency rate in Fannie Mae’srnportfolio was 1.78 percent in the first quarter.  The rate has declined for 20 consecutivernquarters since the first quarter of 2010 when it was 5.47 percent.  The pace of decline has slowed in recent months and FanniernMae said it expects this to continue due to the negative impact of long foreclosurerntimelines in some states, particularly New York, Florida, and New Jersey. </p

Fannie MaernPresident and CEO Timothy J. Mayopoulos called the first quarter one of strongrnfinancial performance with solid revenues. rn”While we experienced some interest rate volatilityrnagain this quarter, we expect to remain profitable on an annual basis for thernforeseeable future,” he said. “We continued to make progress against ourrngoals, and we are managing the company on a basis that produces good economic value for the taxpayer. We are focused on delivering value to ourrnbusiness partners and making it simplerrnand easier for lenders to serve the housing marketrnsafely, efficiently, and profitably.”</p

Earlier in the week Freddie Mac reported firstrnquarter 2015 earnings that were positive for the 14^th consecutivernquarter. The company said it had net income of $524 million, more than doublernthe $227 million reported in the fourth quarter of 2014, and comprehensivernincome of $746 million compared to $251 million. </p

These increases were primarily driven by lower derivativernlosses as interest rates declined and the yield curve flattened less in thernfirst quarter of 2015 compared tornthe fourth quarter of 2014. These losses totaled $2.4 billion, of which $1.8rnbillion was related to fair value changes. Additionally, Freddie Macrnreclassified certain seriously delinquentrnsingle-family mortgage loans from held-for-investment to held-for-sale in thernfirst quarter of 2015, a reclassification that resulted in a benefit for creditrnlosses, offset by lower other non-interest income and higher non- interest expense. </p

Net interest income was $3.65 billionrncompared to $3.59 billion in the previous quarter with guarantee feesrnaccounting for about 40 percent of the total. </p

Freddie Mac said the portion of itsrnsingle-family book of business originated after 2008 continues to grow and nowrnaccounts for 61 percent of that portfolio. rnHARP and other relief refinance loans represent an additional 20rnpercent.</p

The company continues to reduce itsrnexposure to loss, selling both first and mezzanine loss positions on $44.2rnbillion in single-family mortgage to private investors during the first quarterrnand $4.1 billion of less liquid assets including $300 million in unpaidrnprincipal balance (UPB) seriously delinquent single-family loans.  Freddie Mac also plans to conclude itsrnlargest single sale of seriously delinquent loans (nearly $1 billion in UPB) inrnthe second quarter. </p

Freddie Mac’s serious single familyrndelinquency rate fell to 1.73 percent in the first quarter of 2015 compared torn2.20 percent one year earlier.  Thernmultifamily delinquency rate was 0.03 percent.</p