Fannie Mae today is a different company with different leadership, different constituencies and different priorities.
More than 80 percent of the current senior management team was hired or promoted into their roles following conservatorship. Every member of Fannie Mae’s management committee has joined the company or been promoted into his or her current role since the housing crisis. And more than half of our 7,000 employees have been hired since conservatorship. Suffice to say, the people of Fannie Mae today are part of the solution, not part of the problem.
In addition to new leadership and new employees, Fannie Mae now serves different constituents. The company is no longer run for the benefit of private shareholders. Instead, it is managed in the overall interest of taxpayers, which is consistent with the substantial public investment in the company. Fannie Mae’s financial condition has improved significantly. In the first nine months of 2012, we reported $9.7 billion in net income, and to date the company has paid $28.5 billion in dividends to the Treasury. Moreover, we expect to report net income for the full year for the first time since 2006.
Our current priorities also are well aligned with the public interest. We are committed to funding the mortgage market, assisting troubled borrowers, and building a strong new book of business. We have been the leading source of credit for the mortgage market, helped millions of homeowners through modifications and refinancing, and acquired a new book of business applying sensible credit standards.
As of Sept. 30, 63 percent of our total book of business has been acquired since conservatorship.
While gratified that we have been able to provide this level of liquidity to the market, we recognize that the [government-sponsored enterprises] are playing an outsized role. Fannie Mae’s single-family market share was approximately 41 percent at the end of 2011. In a properly functioning market, Fannie Mae should not have such a significant share. However, private capital is naturally opportunistic, leaning in when times are good, and moving to the sidelines when conditions are bad. More than four years after the onset of the financial crisis, we see little evidence of substantial private capital ready to meet the single-family market need.
In the multifamily market there is a different story. Fannie Mae’s market share hit a “high water” level of 49 percent during the housing crisis. Now, there is more certainty in multifamily and, as a result, our share has declined to about one-fourth of the market.
We continue to be concerned about market capacity. We’ve seen significant deconsolidation in the industry as major market participants have pulled back or left the market entirely. Moreover, we are hearing a lot about lenders being reluctant to extend credit. There are many potential reasons for this, such as regulatory concerns, repurchase risk, and lack of underwriting capacity.
However, repurchase risk and other uncertainties clearly need to be addressed by the industry. Ultimately, our goal is that, when there are defects in that origination process, we and the lenders will have a set of remedies that makes the need for repurchases “a last resort.”