Fannie Mae

Good day and welcome to the Fannie Mae Third Quarter 2021 Results Conference Call. At this time, I will now turn it over to your host, Pete Backell, Fannie Mae's Director of External Communications.

Hello, and thank you all for joining today's conference call to discuss Fannie Mae's Third Quarter 2021 Financial Results. Please note this call may include forward-looking statements, including statements related to the company's business plans and strategies and the impact of those plans and strategies, the company's financial results and loss mitigation activities, as well as economic and housing market conditions. Future events may turn out to be very different from these statements. The risk factors and forward-looking statement sections in the company's third quarter 2021 Form 10Q, filed today, and its 2020 Form 10K, filed February 12, 2021, describe factors that may lead to different results. A recording of this call may be posted on the company's website. We ask that you do not record this call for public broadcast and that you do not publish any full transcript. I'd now like to turn the call over to Fannie Mae Chief Executive Officer, Q.R. Freider, and Fannie Mae President and Interim Chief Financial Officer, David Benson. Good morning and welcome.

Thank you for joining us to review our third quarter performance. Our results reflect the strengths of our business model and also some market-based factors specific to this quarter, such as strong home price growth and low interest rates. Dave will cover those results in a moment. Before he does, I want to focus on the themes that are driving our mission-first thinking here at Fannie Mae, as well as some important third-quarter initiatives. There is commitment up, down, and across our company to advance equitable and sustainable access to homeownership and quality, affordable rental housing. It's a commitment rooted in our mission and also in the profound inequities and shortcomings of today's housing market. It's why we recently made a groundbreaking change to Desktop Underwriter to consider positive rental payment history for eligible borrowers. The solid track record of consistent rent payments has rarely been included on credit reports, limiting the ability to use rent payments when assessing the creditworthiness of a first-time mortgage applicant. We believe this change will increase opportunities for homeownership for the approximately 20% of the U.S. population who have little to no established credit history. even though they may have a history of making on-time rental payments. Simply put, we see it as a new way to safely and soundly identify qualified first-time homebuyers who have historically been excluded from mortgage credit, especially people of color. The second example, Refine Now. Racial and income disparities in refinance take-up rates have persisted for far too long. So, working with FHFA, we created a refinance loan for low-income borrowers that allows them and their lenders to refinance a mortgage at a lower rate. We are very pleased that FHFA recently allowed us to expand the population of people who can take advantage of Refine Now. These are two instances in which the mortgage process can be adapted to create flexibilities for underserved borrowers and potential borrowers in ways that are smart, practical, safe, and sound. We are also working with lenders and educating borrowers to drive greater adoption of these creative solutions. That's why we are expanding Fannie Mae's consumer education efforts. At the outset of the pandemic, we began our Here to Help campaign. That campaign showed the value of putting credible, independent information in the hands of people navigating housing difficulties. And we think it will prove equally valuable for first-time homebuyers or potential homebuyers navigating the mortgage process. More than 5 million unique visitors have visited one of our consumer sites since the pandemic began. This includes the Here to Help pandemic recovery tools, as well as our Your Own Story homebuyer education tools. More broadly, we believe more outreach needs to be done to identify home-ready borrowers who are excluded from traditional underwriting. These are the kinds of homeowner and renter-centered initiatives that will be key components of our equitable housing finance plan. I commend Acting Director Sandra Thompson for her leadership in calling on the GSEs to create these three-year plans, which will lend momentum and focus to the work we already have underway. We are actively listening to stakeholders as we prepare our plan, and the listening sessions FHFA has organized will help make our plan stronger. FHFA's leadership on the issue of housing equity is in keeping with its actions across a broad range of areas. These include an expansion of our low-income housing tax credit investment activity and also FHFA's recent decision to allow desktop appraisals on many purchase loan acquisitions beginning in 2022 which will reduce costs and time for many borrowers. We believe this flexibility is squarely in keeping with our industry's efforts to make the appraisal process more data-driven and more objective. We share the Acting Director's conviction that our housing mission, sustainability, and safety and soundness are inextricably linked. We look forward to continuing to work with FHFA and others in the housing and mortgage finance markets on the many challenges facing borrowers and renters. These include... The need to reduce or eliminate financial or other barriers to first-time homeownership, particularly those that don't benefit borrowers. The need to deliver mortgage capital where it's most needed and using it to help close inequities where they are most stark. And the need to increase diversity in the housing ecosystem so their industry reflects the people it serves. These are all big challenges, and Fannie Mae looks forward to being part of the solutions. Now, I'll turn it over to Dave.