Core Insights - Fannie Mae's June 2025 Monthly Summary is now available, providing insights into the company's activities related to its gross mortgage portfolio, mortgage-backed securities, and other guarantees [1] - The report includes data on interest rate risk measures and serious delinquency rates, which are critical for assessing the company's financial health and risk exposure [1] Company Activities - The monthly summary report details Fannie Mae's year-to-date activities, indicating ongoing performance in the mortgage market [1] - Information on the gross mortgage portfolio and mortgage-backed securities is included, reflecting the company's operational scale and market engagement [1] Risk Measures - The report outlines interest rate risk measures, which are essential for understanding how fluctuations in interest rates may impact the company's financial stability [1] - Serious delinquency rates are also reported, providing insight into the credit quality of the mortgage portfolio and potential future risks [1]

Core Viewpoint - The mortgage-backed security (MBS) market remains challenging due to ongoing tariff issues and tensions between President Trump and Federal Reserve Chair Jerome Powell, impacting AGNC Investment's performance despite a high dividend yield of over 15% [1] Market Environment - AGNC primarily holds MBS backed by government-sponsored agencies like Fannie Mae and Freddie Mac, which are generally considered low-risk due to their government backing [2] - Interest rates significantly affect MBS values, with yields trading at a spread to U.S. Treasury yields, which are viewed as safe [3] - Regulatory tightening has led banks to avoid longer-duration assets like MBS, contributing to market pressure [3] Company Performance - AGNC reported a 5% decline in tangible book value (TBV) to $7.81 per share at the end of Q2, down from $8.25 per share at the end of Q1, but noted a 1% increase in July after accounting for dividends [6] - The average net interest spread for AGNC was 2.01%, down from 2.69% a year ago and 2.12% in Q1, attributed to reduced benefits from hedges and increased hedge costs [7] - AGNC generated $0.38 per share in net spread and income from dollar rolls, resulting in a negative 1% economic return on tangible common equity [8] Leverage and Capital Deployment - The company ended the quarter with a leverage ratio of 7.6 times tangible net book value, slightly up from 7.5 at the end of Q1 [9] - AGNC raised $800 million in equity through its ATM program at a premium to TBV, with plans to invest the proceeds gradually [10] Future Outlook - AGNC expects net spread and dollar roll income to remain in the mid- to high-$0.30 to low- to mid-$0.40 range, which should support its dividend [12] - The company requires tighter MBS spreads for TBV improvement, as current wide spreads can be beneficial for investment returns but need to narrow for stock appreciation [13] - With MBS spreads near historical highs, the stock may be attractive for risk-tolerant, income-oriented investors, although the current price reflects some of this potential [14]

Group 1 - Fannie Mae plans to report its second quarter 2025 financial results on July 30, 2025, before the U.S. financial markets open [1] - A webcast to discuss the financial results is scheduled for 8:00 a.m. ET on the same day [1] - Prior to the webcast, various financial documents including the earnings news release and quarterly report will be available on the company's website [2] Group 2 - The webcast can be accessed via a provided link, and participants can also listen by phone if they encounter difficulties [3] - A transcript of the webcast will be published on the company's financial results webpage after the event [2]

Economic Outlook - Mortgage rates are projected to end 2025 at 6.4 percent and 2026 at 6.0 percent, revised down from previous forecasts of 6.5 percent and 6.1 percent [1] - Annual home price growth is now forecasted at 2.8 percent for 2025 and 1.1 percent for 2026, down from earlier projections of 4.1 percent and 2.0 percent [1] - Total home sales are expected to reach 4.85 million units in 2025 and 5.35 million units in 2026 [1] Research Group Insights - Fannie Mae's Economic and Strategic Research Group analyzes current data, historical trends, and conducts surveys to inform economic and housing forecasts [4]

Financial Data and Key Metrics Changes - AGNC reported a comprehensive loss of $0.13 per common share for Q2 2025, with an economic return on tangible common equity of negative 1% [17] - The tangible net book value per share declined by $0.44, while dividends declared per common share were $0.36 [17] - Quarter-end leverage increased slightly to 7.6x tangible equity from 7.5x in Q1, with average leverage rising to 7.5x from 7.3x [17][18] Business Line Data and Key Metrics Changes - Net spread and dollar roll income decreased to $0.38 per common share, primarily due to the timing of capital deployment and higher swap costs [19] - The average projected life CPR of the portfolio declined to 7.8% from 8.3% in Q1, while actual CPRs averaged 8.7% for the quarter, up from 7% in the prior quarter [20] Market Data and Key Metrics Changes - Agency mortgage-backed securities (MBS) spreads widened, with the current coupon spread to treasury and swap benchmarks ending the quarter wider by 7 and 14 basis points respectively [10] - The net supply of new MBS is expected to be about $200 billion this year, at the low end of most forecasts [11] Company Strategy and Development Direction - The company maintains a positive outlook for agency MBS, driven by manageable supply, anticipated regulatory changes, and stabilizing spreads [24] - AGNC is focused on maintaining sufficient liquidity to navigate financial market volatility and is opportunistically deploying capital raised during the quarter [9][18] Management's Comments on Operating Environment and Future Outlook - Management noted that the financial market stress in April led to a negative investor sentiment, but markets recovered towards the end of the quarter [6][9] - The company expects banks and foreign demand for agency MBS to grow, with seasonal supply patterns for MBS issuance improving as they enter Q3 [10] Other Important Information - The company raised just under $800 million of common equity through its At the Market Offering Program at a significant premium to tangible net book value [18] - The weighted average coupon of the asset portfolio increased to 5.13% during the quarter, with 81% of assets having positive prepayment attributes [22] Q&A Session Summary Question: Insights on the attractive environment for agency MBS - Management indicated a favorable outlook for agency MBS, with the potential for raising additional capital or increasing leverage depending on market conditions [27][30] Question: Core earnings trajectory and dividend levels - Management discussed the alignment of net spread and dollar roll income with portfolio economics, estimating returns in the high teens [37][40] Question: Capital deployment progress and coupon preferences - Management confirmed that about $1 billion worth of mortgages were purchased recently, favoring higher coupon specified pools with favorable prepayment characteristics [48][49] Question: Optimal size of the company and market capacity constraints - Management emphasized growth is not for its own sake but to benefit existing shareholders, while being mindful of market capacity constraints [55][59] Question: Balance between swap hedges and treasury futures - Management indicated a preference for a balanced mix of swaps and treasuries, with a current overweight in swaps due to expected stability in swap spreads [64][66] Question: Impact of changes in credit scoring on prepayment environment - Management acknowledged that changes in credit scoring could lead to higher prepayments but deemed the impact not significant from an investor perspective [106][109] Question: Risks associated with lower rates and rapid repayments - Management recognized the risk of a more efficient market leading to quicker prepayments but noted that significant rate drops would be necessary for widespread refinancing [112][115]

Core Insights - Mortgage rates have remained high, but improving credit scores can significantly lower rates, potentially saving over $55,000 in interest on a $300,000 loan [1] - As of October 2025, credit scores are a major factor in determining mortgage rates, alongside debt levels and down payment sizes [2] - Changes in credit scoring systems are expected to help approximately 5 million Americans qualify for better mortgage rates [7][8] Mortgage Rates and Credit Scores - Sample average national mortgage APRs vary by credit score tier, with a FICO 800 score earning a 6.83% APR for a 30-year fixed mortgage as of October 3, 2025 [9] - A credit score of 620 is typically required for a conventional loan, while FHA loans may allow scores as low as 500 with a 10% down payment [10] Factors Influencing Mortgage Rates - Besides credit scores, mortgage rates are influenced by debt-to-income (DTI) ratios, loan-to-value (LTV) ratios, down payment amounts, and loan terms [4][5] - VA loans often have the lowest mortgage rates among various loan types [6][7] Future Changes in Credit Scoring - Fannie Mae and Freddie Mac will start considering VantageScore 4.0 in addition to traditional FICO scores, which may improve access to mortgages for many [7] - FICO's direct provision of credit scores to lenders could reduce costs for borrowers if savings are passed on [8] Current Market Conditions - The average 30-year mortgage rate is reported at 6.34% as of October 2, 2025, with a good mortgage rate being in the 7.30% range or lower [12]

From @WSJopinion: The President may think the feds can keep Fannie and Freddie on a regulatory leash, but the political and financial incentives mean they will invariably revert to their reckless ways https://t.co/GaJExsFEsM ...

Core Viewpoint - Fannie Mae is considered a favorable investment opportunity following the passage of President Trump's legislation and a decrease in stock price, with a current rating of Hold [1]. Group 1: Company Analysis - Fannie Mae is analyzed through a value investing lens, focusing on an owner's mindset and a long-term investment horizon [1]. - The company is part of a broader investment strategy that does not include short selling or negative recommendations [1]. Group 2: Analyst's Position - The analyst holds a beneficial long position in Fannie Mae shares, indicating confidence in the company's future performance [2].

Core Viewpoint - AGNC Investment offers a high monthly dividend yield exceeding 15%, significantly higher than the S&P 500, but has not increased its dividend in over 15 years and has cut it several times, making it less ideal for passive income seekers [1][13] Group 1: AGNC Investment - AGNC Investment focuses solely on mortgage-backed securities (MBS) that are protected from credit risk by government agencies, resulting in low returns [5] - The company enhances its returns by investing in MBS on a leveraged basis, which increases its risk profile [5] - Since its IPO in mid-2008, AGNC has cut its dividend several times, leading to a 50% loss in stock value since its IPO, despite a total return of over 10% annually [9][11] Group 2: Main Street Capital - Main Street Capital is a business development company (BDC) that provides capital solutions to lower middle market companies and has a higher risk profile but offers much higher returns, with a weighted average effective yield of 12.7% [6] - The company has never cut its monthly dividend since its IPO in 2007 and has increased its payout by 132% over the years, also providing supplemental dividends since 2013 [8] - Main Street Capital's stock price has increased nearly 10% annually, contributing to higher total returns compared to AGNC [11][12] Group 3: Comparison and Investment Considerations - While AGNC offers a substantial monthly dividend, its lack of growth in payouts and potential for future cuts may lead to lower long-term total returns [13] - In contrast, Main Street Capital provides an attractive and growing monthly dividend, supplemented by quarterly payouts, making it a potentially better long-term option for passive income [14]

Core Viewpoint - Fair Isaac Corporation (FICO) shares fell 13.4% following comments from the Federal Housing Finance Agency (FHFA) Director Bill Pulte regarding the introduction of VantageScore 4.0 as a potential competitor to FICO's credit scoring monopoly [1][4]. Group 1: Market Dynamics - FICO has historically held a near-monopoly on credit scoring, allowing for significant price increases, the latest occurring in January [1]. - The FHFA's endorsement of VantageScore 4.0 for use by government-sponsored entities (GSEs) like Fannie Mae and Freddie Mac could lead to a reduction in FICO's market share, as these GSEs guarantee about half of all U.S. mortgages [2][4]. - VantageScore, developed in 2017, utilizes alternative data and less stringent traditional data requirements, potentially benefiting borrowers with limited credit history [3]. Group 2: Competitive Landscape - Despite the recent decline in FICO's stock, it still trades at a high valuation of 70 times earnings, indicating that investors do not anticipate significant declines in market share or revenue [6]. - The FHFA had previously mandated the use of VantageScore by Fannie Mae and Freddie Mac in late 2022, providing a three-year grace period for implementation, suggesting that the recent news may not be entirely new [7]. - The introduction of VantageScore could mitigate the risk of federal agencies moving towards a "bi-merge" scoring system, which would reduce the reliance on FICO scores [8]. Group 3: Pricing Strategy - FICO's recent price hikes, including the latest increase in January, may be halted as the new FHFA director aims to lower costs for homeowners [9].