GSEs Report First-Quarter Financials
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac reported mixed results on their first quarter financial reports.
While Freddie Mac reported year-over-year and quarter-to-quarter increases in net income, Fannie Mae’s results were lower in the first quarter of 2022 than in the previous quarter and in the first quarter of 2021.
Freddie Mac reported net income of $3.8 billion for the first quarter of this year, an increase of 37 percent over the first quarter of 2021, which the company attributed to higher net revenues and a credit reserve release in its single-family business. Its 11 percent increase in net revenues were driven by higher net interest income and an increase in net investment gains.
“Freddie Mac delivered a strong first quarter performance, with net income exceeding both the first and fourth quarters of 2021,” said Freddie Mac CEO Michael J. DeVito. “Single-family serious delinquencies have declined to their lowest point in two years, and multifamily delinquencies are at near pre-pandemic levels as well. We remain intensely focused on our expansive mission, with an emphasis on promoting greater equity and sustainability.”
Fannie Mae reported $4.4 billion in net income for the quarter, down from $5.2 billion in the fourth quarter of 2021 and slightly lower than $5 billion in the first quarter of the previous year. Fannie attributed results to a shift from credit-related income to credit-related expense and a shift from investment gains to investment losses, partially offset by a shift from fair value losses to fair value gains. Fannie also noted that it recorded investment losses in the first quarter of 2022 of $102 million, compared with investment gains of $418 million in the fourth quarter of 2021. The shift from investment gains to investment losses was driven primarily by the absence of loan sales in the first quarter of 2022.
“Fannie Mae’s solid first quarter results were set against a backdrop of rising interest rates, inflationary pressures, robust home price appreciation, and geopolitical tensions,” said David C. Benson, President and Interim CEO. “We continue to focus on the needs of renters and homeowners as they navigate these challenges and on prudently managing our risk.”
Both enterprises reported drop-offs in new single-family business activity due to the sharp decline in refinance business resulting from higher mortgage rates. Freddie said its new business activity fell 43 percent year-over-year to $207 billion. Fannie’s single-family conventional acquisition volume was $239.5 billion in the first quarter of 2022, a decrease of 16 percent compared with $284.8 billion in the fourth quarter of 2021. Refinance acquisition volume declined from $177.6 billion in the fourth quarter of 2021 to $135.5 billion in the first quarter of 2022.
Freddie said it provided funding for approximately 691,000 single-family homes, more than 412,000 of which were refinance loans. First-time homebuyers represented 48 percent of new single-family home purchase loans.
Fannie said it had $104 billion of single-family home purchase acquisitions in the first quarter of 2022, of which nearly 50 percent were for first-time homebuyers. It acquired approximately 312,000 home purchase loans and 487,000 refinance loans during the quarter.
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.
