Fannie Mae earned $4 billion in the second quarter of 2026. That is its 34th straight quarterly profit, up from $3.7 billion in the first quarter and 20% higher than a year earlier. The bottom line: net worth climbed to $116.5 billion, from $112.7 billion three months before.
The stock, formally Federal National Mortgage Association, tells a different story. Shares trade at $3.47, down 39.5% over 30 days and 68.5% since January. The three-year total return is still roughly fourfold, so the slide hasn’t erased the longer run.
Why the shares are under pressure
Investors will note the trigger. Michael Burry publicly warned of heavy dilution for common shareholders, and said he was moving his own exposure from the common stock into junior preferred shares.
The valuation gap is wide. One widely followed narrative puts fair value at $10.50, which would make the stock about 67% undervalued by that measure. Earnings multiples point the other way: at 87.7 times earnings, Fannie trades far above the US diversified financial industry at 16.9 times and peers at 22.6 times.
Two risks stand out for bulls. Conservatorship timelines remain unresolved, and credit stress in multifamily lending is rising.
What supports the earnings
The company guarantees a $4.1 trillion book and is the largest guarantor of US residential mortgage debt. Repricing of that book, with higher average guaranty fees on single-family loans, could firm up the net interest margin and lift net revenue.
In the second quarter Fannie put $125 billion of liquidity into the mortgage market, buying and refinancing loans on single-family homes and multifamily rentals. It keeps every dollar of earnings it doesn’t pay the US government as preferred dividends, and that money goes back into the market.
Conservatorship, and the long road back
Fannie Mae lost billions on its investment portfolios and mortgage-backed securities guarantees during the financial crisis, and the government stepped in. The Federal Housing Finance Agency took it into conservatorship in 2008, and quarterly dividends to investors stopped. Washington holds senior preferred stock and still collects preferred payments.
The company returned to profit in 2012. By 2014 it had repaid all the support it received, and it has since sent billions more to the Treasury.
How it got here
Congress created Fannie Mae in 1938 under the New Deal. By 1933, an estimated 20% to 25% of the nation’s mortgage debt was in default, and nearly a quarter of American homeowners lost their homes to banks. Fannie’s job was to put federal money in local banks’ hands by buying mortgages insured by the Federal Housing Administration, which let those banks lend more.
For its first 30 years it held a monopoly on the secondary mortgage market. In 1954 it became a mixed-ownership corporation, with the government holding preferred stock and private investors the common. A 1968 conversion took its activity and debt off the federal budget, and it has been publicly traded since.
Today it still works the same way in principle. It bundles mortgages into mortgage-backed securities so lenders can recycle their capital into new loans. As of 2025 it held more than $4.3 trillion in assets, which makes it the largest company in the United States and the fifth largest in the world by that measure.
Sources
- Fannie Mae
- Federal National Mortgage Association (FNMA) Is Back In Focus, What Are Investors Watching?
- How to Buy Fannie Mae Stock (FNMA) in 2026 | The Motley Fool
Photo: User:AgnosticPreachersKid (CC BY-SA 3.0)
