The arrival of the new leader in the White House, President Donald Trump, has not changed the government-enterprise, Fannie Mae’s plans for 2017, Fannie Mae’s CEO Timothy Mayopoulos, said on Friday. The company will remain focused on its emphasis on automated loan validation and other customer-focused innovations.
“The change in administration hasn’t affected our approach to our business,” Mayopoulos said in an interview. “We’ve been in conservatorship now for over eight years, and it’s very clear to us what our business objectives are.”
Fannie Mae is “focused on enhancing the housing finance system and bringing innovation to the market, things like [the loan-validation product] Day 1 Certainty that we think will be good for the housing finance system regardless of whatever changes might get made by this administration or any future administration,” he said.
Although Mayopoulos has yet to sit down with new Treasury Secretary Steve Mnuchin, Fannie Mae executives regularly meet with Treasury officials, and that is expected to continue.
The government-enterprises’ fourth quarter earnings more than doubled from a year earlier, to $5.04 billion. Fannie Mae had net earnings of $12.3 billion, up 12 percent from 2015, for the full year last year.
However, the company does not control some of the drivers of its earnings results, said Mayopoulos. They are not in control of things such as the interest rate changes and home prices.
“As today’s numbers demonstrate, these factors can cause significant volatility in our financial results, and they may have a positive or negative effect in a quarter or year,” he said.
In 2016, Fannie Mae made $9.6 billion in dividend payments to the Treasury, and plans to make another $5.5 billion payment in March. This will bring the government-enterprise up to a total payment amount of $159.9 billion in dividend payments to the Treasury.
Fannie Mae drew a total of $116.1 billion from the Treasury between 2008 and 2012, but it has not taken any draws since then. Its capital cushion is on its way to being zero by 2018. It is currently down to $600 million from $1.2 billion a year ago.
Fannie Mae said it expects to remain profitable for the foreseeable future. Currently, the company sees over two-thirds of its net interest come from its loan-guarantee business, while less than one-third of its net interest comes from the mortgage investment portfolio.
This completes the shift “from [back in 2004] essentially being a mortgage-investment-oriented company that had a guarantee fee business that supplemented that to now being much more of an insurance-oriented company that collects a premium on every loan that we guarantee against credit loss,” Mayopoulos said.