|FEDERAL NATIONAL MORTGAGE ASSOCIATION FANNIE MAE filed this Form 10-Q on 05/07/2015|
to Treasury each quarter even when we did not have sufficient income to pay the dividend. We have not received funds from Treasury under the agreement since the first quarter of 2012. As of the date of this filing, the maximum amount of remaining funding under the agreement is $117.6 billion. From 2008 through the first quarter of 2015, we paid a total of $136.4 billion in dividends to Treasury on the senior preferred stock. Under the terms of the senior preferred stock purchase agreement, dividend payments do not offset prior Treasury draws, and we are not permitted to pay down draws we have made under the agreement except in limited circumstances. Accordingly, the current aggregate liquidation preference of the senior preferred stock is $117.1 billion, due to the initial $1.0 billion liquidation preference of the senior preferred stock (for which we did not receive cash proceeds) and the $116.1 billion we have drawn from Treasury.
The Director of FHFA directs us to make dividend payments on the senior preferred stock on a quarterly basis. We expect to pay Treasury an additional senior preferred stock dividend of $1.8 billion by June 30, 2015 for the second quarter of 2015.
Housing and Mortgage Market and Economic Conditions
Economic growth slowed in the first quarter of 2015 compared with the fourth quarter of 2014. According to the U.S. Bureau of Economic Analysis advance estimate, the inflation-adjusted U.S. gross domestic product, or GDP, rose by 0.2% on an annualized basis in the first quarter of 2015, compared with an increase of 2.2% in the fourth quarter of 2014. The overall economy gained an estimated 591,000 non-farm jobs in the first quarter of 2015. According to the U.S. Bureau of Labor Statistics, over the 12 months ending in March 2015, the economy created an estimated 3.1 million non-farm jobs. The unemployment rate was 5.5% in March 2015, compared with 5.6% in December 2014.
According to the Federal Reserve, total U.S. residential mortgage debt outstanding, which includes $9.9 trillion of single-family debt outstanding, was estimated to be approximately $10.9 trillion as of December 31, 2014 (the latest date for which information is available), compared with $10.8 trillion as of September 30, 2014.
Housing sales were mixed, with existing home sales declining and new home sales rising, during the first quarter of 2015 as compared with the fourth quarter of 2014. Total existing home sales averaged 5.0 million units annualized in the first quarter of 2015, a 1.8% decrease from the fourth quarter of 2014, according to data from the National Association of REALTORS®. Sales of foreclosed homes and preforeclosure, or “short,” sales (together, “distressed sales”) accounted for 10% of existing home sales in March 2015, compared with 11% in December 2014 and 14% in March 2014. According to the U.S. Census Bureau, new single-family home sales increased during the first quarter of 2015, averaging an annualized rate of 513,000 units, a 8.8% increase from the fourth quarter of 2014.
The number of months’ supply, or the inventory/sales ratio, of available existing homes and of new homes increased in the first quarter of 2015. According to the U.S. Census Bureau, the months’ supply of new single-family unsold homes was 5.3 months as of March 31, 2015, compared with 5.1 months as of December 31, 2014. According to the National Association of REALTORS®, the months’ supply of existing single-family unsold homes was 4.6 months as of March 31, 2015, compared with a 4.4 months’ supply as of December 31, 2014.
The overall mortgage market serious delinquency rate, which has trended down since peaking in the fourth quarter of 2009, remained above long-term averages at 4.2% as of March 31, 2015, according to the Mortgage Bankers Association National Delinquency Survey, compared with 4.5% as of December 31, 2014. We provide information about Fannie Mae’s serious delinquency rate, which also decreased in the first quarter of 2015, in “Single-Family Guaranty Book of Business—Credit Performance.”
Based on our home price index, we estimate that home prices on a national basis increased by 0.4% in the first quarter of 2015, following increases of 4.6% in 2014 and 8.0% in 2013. Despite the recent increases in home prices, we estimate that, through March 31, 2015, home prices on a national basis remained 9.9% below their peak in the third quarter of 2006. Our home price estimates are based on preliminary data and are subject to change as additional data become available.
Many homeowners continue to have “negative equity” in their homes as a result of declines in home prices since 2006, which means their mortgage principal balance exceeds the current market value of their home. This increases the likelihood that borrowers will abandon their mortgage obligations and that the loans will become delinquent and proceed to foreclosure. According to CoreLogic, Inc. the number of residential properties with mortgages in a negative equity position in the fourth quarter of 2014 rose slightly, reflecting the typical weakness in home values during the final quarter of the year, increasing to approximately 5.4 million from 5.2 million in the third quarter of 2014, but still below the 6.6 million residential properties with mortgages in a negative equity position in the fourth quarter of 2013. The percentage of properties with mortgages in a negative equity position in the fourth quarter of 2014 was 10.8%, up from 10.4% in the third quarter of 2014 but down from 13.4% in the fourth quarter of 2013.
Thirty-year fixed-rate mortgage rates ended the quarter at 3.69% for the week of April 2, 2015, down from 3.87% for the week of December 31, 2014, according to the Freddie Mac Primary Mortgage Market Survey®.