Fannie Mae reported that business in their single-family sector experienced a massive loss for the fourth quarter 2015 and full year 2015, just one day after FHFA Director Mel Watt stated during an address in Washington, D.C., that risks facing the agency, namely the GSEs’ declining capital buffer, are certain to escalate the longer the conservatorships of the GSEs continue.
Single-family net income was 936 million dollars in the fourth quarter of 2015, down considerably from 2 billion dollars in the third quarter of 2015. Fannie Mae attributes the decline in this sector to a shift to credit-related expense in the fourth quarter from credit-related income in the third quarter. The total year-end single-family business net income for 2015 reached 5 point 1 billion dollars, compared with 8 point 5 billion dollars in 2014. This is also due to a shift to credit-related expense in 2015 from credit-related income in 2014.
The mortgage industry has been monitoring the huge decline in oil prices closely to see if it will have a negative effect on housing, but the truth is, there are both good and bad outcomes to this new crisis. Housing markets that are major producers of oil will be hit hardest by lower oil prices, while demand will decline for high-end homes from foreign buyers, according to a report from Capital Economics.