Fannie, Freddie Report Third-quarter Financial Results
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac reported earnings declines from the second to third quarter of 2021, but both experienced increases in year-over-year earnings.
Fannie Mae announced that its net income for the quarter was $4.8 billion, down from $7.2 billion during the second quarter of 2021. The company booked net income of $4.3 billion in the third quarter of 2020.
The quarterly profit pushed Fannie’s net worth to $42.2 billion as of September 30.
“It was another strong quarter for the housing market and for Fannie Mae,” said Fannie CEO Hugh R. Frater. “Our results reflect the credit quality of our guaranty book, a growing economy, strong home price growth, and low interest rates. However, rising home prices, while good for homeowners and others involved with selling a home, can negatively impact affordability for first-time homebuyers. For too many lower- and middle-income families, affordable housing options are scarce and inequities persist in the housing economy. We look forward to continuing to work with FHFA and others to advance equitable and sustainable access to homeownership and affordable, quality rental housing for communities across America.”
Financial highlights of Fannie’s third quarter include:
$312.7 billion in liquidity provided to the single-family and multifamily mortgage markets.
$115.4 billion of single-family home purchase acquisitions in the third quarter of 2021, of which nearly 50 percent were for first-time homebuyers.
Refinance acquisitions were $180.9 billion in the third quarter of 2021, a decline from $243.8 billion in the second quarter of 2021, but remained at a high level due to the continued low interest-rate environment.
Despite the strong earnings, Fannie said the company remains significantly undercapitalized.
Fannie initiated nearly 1.4 million single-family forbearance plans since the onset of the COVID-19 pandemic. As of September 30, 2021, approximately 1.2 million of these loans have exited forbearance.
Freddie Mac reported net income of $2.9 billion for the most recent quarter, down from $3.7 billion in the second quarter. However, third-quarter earnings were up 19 percent year-over- year, driven by higher net revenues and a credit reserve release.
Freddie helped 415,000 families purchase a home during the quarter, including 46 percent first-time homebuyers. Freddie helped another 612,000 homeowners refinance.
Financial highlights of Freddie’s third quarter include:
$318 billion in total liquidity provided, with $299 billion of that directed to the single-family market.
Single-family new business was down 11 percent year-over-year, as refinance activity moderated from historically high levels in the prior year. Year-to-date activity is $949 billion, up 34 percent year-over-year.
1.15 percent of its single-family loans, based on loan count, were in forbearance as of September 30, 2021, down from 2.95 percent in the third quarter of 2020.
Net interest income increased 28 percent year-over-year to $4.4 billion, primarily driven by continued mortgage portfolio growth and higher average portfolio guarantee fee rates in single-family.
The company’s net worth increased to $25.3 billion.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
