Fannie Mae (OTCMKTS:FNMA) reported third-quarter 2026 net income of $4.2 billion, up 5% from the prior quarter and 8% from a year earlier, as stable guaranty-business revenue helped offset a higher provision for credit losses amid elevated interest rates and pressure on housing affordability.
Acting Chief Executive Officer and Chief Operating Officer Peter Akwaboah said the company had provided $344 billion of liquidity to the mortgage market through the first nine months of 2026, supporting about 1.2 million households, including more than 295,000 first-time homebuyers. He said 46% of year-to-date single-family acquisitions and 77% of multifamily acquisitions served households earning at or below 100% of area median income.
The company’s net worth rose to more than $119 billion during the quarter. Chief Financial Officer Chryssa C. Halley said Fannie Mae increased net worth by $3.1 billion and improved its illustrative return on required equity by 30 basis points from the second quarter, while also reducing its regulatory capital deficit.
Revenue and interest-rate effects
Net revenues totaled $7.7 billion, the company’s highest quarterly level since 2023, according to Halley. Fannie Mae said 79% of net revenues came from its core guaranty business.
The company’s $4.1 trillion guaranty book generated more than $6 billion in guaranty-fee income during the quarter. More than 70% of that income came from loans and related mortgage-backed securities originated in 2022 and earlier. Portfolio income rose 4% from the second quarter, primarily reflecting higher average balances and yields in the corporate liquidity portfolio.
Halley said higher interest rates have broad effects on the business. In single-family operations, higher rates tend to reduce acquisition volumes but also slow prepayments and book runoff, helping preserve guaranty revenues. Higher rates can also extend the expected life of loans and increase expected credit losses for some borrowers.
In multifamily, elevated rates have pressured property prices, values and new-business volume, while higher debt-service costs and lower property values have contributed to higher expected credit losses, Halley said.
Fannie Mae reported year-to-date net interest margin of 69.2 basis points. The increase during 2026 was driven primarily by growth in the retained mortgage portfolio, while higher average single-family guaranty fees more than offset lower average multifamily guaranty fees.
Credit provisions and delinquencies rise
The company recorded a combined $1.1 billion credit-loss provision in the quarter as both its single-family and multifamily businesses increased their allowances for credit losses. The provision was partly offset by $630 million of fair-value gains and $94 million of investment gains.
Fannie Mae also recorded $1 billion in net unrealized losses on its available-for-sale securities portfolio. Halley said the company expects accumulated unrealized losses to reverse over time as securities approach maturity, provided the securities continue to be held.
The total allowance for credit losses increased by $906 million. The single-family allowance rose $580 million, driven primarily by higher actual and forecast interest rates, newly acquired loans and loans that became delinquent during the quarter. Single-family net charge-offs were $114 million, and the segment recorded a $694 million credit-loss provision.
The multifamily allowance increased $326 million, reflecting weakening credit metrics, a decline in the near-term property-value forecast and elevated interest rates. Multifamily net charge-offs totaled $120 million, while its provision for credit losses was $446 million.
The single-family serious delinquency rate increased to 62 basis points. Halley said recent increases in past-due loans and serious delinquencies were partly attributable to higher rates and persistent inflation, which have constrained household budgets, particularly for lower-income borrowers. The multifamily serious delinquency rate also rose to 62 basis points, and the company expects continued market challenges to result in additional multifamily delinquencies.
Segment performance and operational updates
Single-family net revenue was $6.3 billion, while acquisitions declined from the second quarter as higher mortgage rates reduced refinancing activity. Fannie Mae said it expects that trend to continue if mortgage rates remain elevated. Its $3.6 trillion single-family guaranty book continued to reprice higher, and the average guaranty fee on third-quarter acquisitions increased slightly from the prior quarter.
Multifamily net revenue totaled $1.3 billion, up 4% sequentially and 9% from a year earlier. New-business volume of $14.5 billion rose 2% from the second quarter but declined from the prior-year period, which the company attributed to increased competition and the effect of higher rates on industry volumes. Higher credit-loss provisions reduced multifamily net income, while higher foreclosed-property expenses increased non-interest expense.
Fannie Mae said nearly all of its multifamily guaranty book had some form of credit protection at quarter-end through its Delegated Underwriting and Servicing risk-sharing model and credit-risk-transfer programs.
Administrative expenses declined $27 million from the second quarter and $35 million from a year earlier. Occupancy and technology expenses fell $52 million sequentially, though salary and employee-benefit costs included $28 million of severance expense.
Akwaboah also said Fannie Mae expanded VantageScore 4.0 as an additional credit-score model for all approved lenders during the quarter. Loans originated using the model remain subject to existing tri-merge credit-report requirements.
About Fannie Mae (OTCMKTS:FNMA)
Fannie Mae, formally known as the Federal National Mortgage Association, is a government-sponsored enterprise that supports the U.S. housing finance system. It operates in the secondary mortgage market, purchasing qualifying residential mortgage loans from approved lenders and helping provide liquidity so those lenders can continue offering mortgage financing to homebuyers and homeowners.
Fannie Mae finances its activities primarily by issuing debt and mortgage-backed securities. It also guarantees certain mortgage-backed securities, helping connect mortgage lenders with institutional investors.
