Fannie, Freddie Report First Quarter Financial Results
Written By: Joel Palmer, Op-Ed Writer
First-quarter financial results for Fannie Mae and Freddie Mac show a considerable difference between the early days of the COVID-19 pandemic and the strong mortgage market that has occurred since.
Both of the government sponsored enterprises released their first quarter 2021 financial results in the last week of April.
Fannie Mae reported net income of just under $5 billion for the three months ending March 31. That’s more than $4.5 billion more than the $461 million Fannie reported in the first quarter of 2020.
Freddie Mac’s net income also jumped considerably to $2.8 billion. That was an increase of $2.6 billion from the $173 million reported in the first quarter of 2020.
The biggest difference between 2020 and 2021 for the two GSEs is credit-related income. Last year, Fannie reported credit-related expenses of $2.7 billion in the first quarter, while Freddie’s credit-related expense was more than $1 billion. In the first quarter of 2021, Freddie’s credit-related expense dropped by more than half to $400 million, while Fannie reported credit-related income of $770 million.
High credit expenses in 2020 for both GSEs were due to higher than expected credit losses as a result of the COVID-19 pandemic.
Fannie had 9 percent higher net income between the fourth quarter of 2020 and the first quarter of 2021, while Freddie’s net income declined 5 percent.
Freddie reported new single-family business activity of $362 billion, up 162 percent year-over-year, reflecting strong purchase and refinance activity. Its mortgage portfolio increased 22 percent to $2.5 trillion.
Freddie’s new business activity of $14 billion, up 40 percent year-over-year, driven by the low interest rate environment. Its multifamily mortgage portfolio was $394 billion, up 15 percent year-over-year.
Its net worth nearly doubled year-over-year to $18.8 billion.
“Freddie Mac continued to support homebuyers and renters, providing $377 billion of liquidity for home purchases, refinancings, and the multifamily market in the first quarter of 2021,” said Freddie Mac Chief Financial Officer Christian M. Lown.
Fannie’s single-family conventional acquisition volume was $400 billion in the first quarter of 2021, a decrease of 6 percent compared with the record volume in the fourth quarter of 2020. About 9 percent of the company’s current single-family book of business was originated in the first three months of 2021.
Fannie’s new multifamily business volume was $22 billion during the first quarter of 2021. The Federal Housing Finance Agency (FHFA) established a 2021 multifamily volume cap of $70 billion. Its multifamily book of business increased by $15 billion in the first quarter of 2021 to $399 billion.
Fannie’s net worth more than doubled between the first quarter of 2020 and 2021, from just under $14 billion to $30.2 billion.
“We had another quarter of near-record mortgage volumes as many took advantage of low rates to refinance or purchase a home. In addition, more than two-thirds of the 1.3 million homeowners with Fannie Mae loans who entered forbearance have since exited, even as we continue to help others find solutions,” said Fannie Mae CEO Hugh R. Frater.
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.
