Fannie, Freddie Report Quarterly Earnings Declines
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac reported significantly lower net income in the second quarter compared with the same period a year ago.
Fannie Mae booked net income of $4.6 billion in the second quarter of this year, down 35 percent from the $7.2 billion it earned in the second quarter of 2021. However, its quarterly income was comparable the previous three quarters and was 6 percent higher than the first quarter of this year.
“Our solid second quarter results enhance our financial strength, and we remain focused on both managing risk and serving our mission to provide sustainable and affordable financing for the benefit of renters and homeowners,” said David C. Benson, President and Interim CEO for Fannie.
Freddie Mac’s second quarter 2022 net income totaled $2.5 billion, a decrease of 33 percent year-over-year. Freddie said the decline was primarily driven by a provision for credit losses in the current period, compared to a benefit for credit losses in the prior period. Freddie’s second-quarter net income was down 35 percent from $3.8 billion in the first quarter of this year.
“In the second quarter, Freddie Mac achieved solid financial results and continued to build equity to withstand potential economic stress. As rising mortgage rates, house price appreciation, and other economic factors challenge affordability, we are committed to working across the industry to promote equity and sustainable housing nationwide,” said Freddie Mac CEO Michael J. DeVito.
Fannie Mae grew its net worth another $9 billion during the quarter to $56.4 billion. Freddie Mac added just under $2.4 billion to its net worth to make it $34.1 billion at the end of the second quarter.
Both companies saw far less new business activity in their single-family businesses due largely to higher mortgage rates and their impact on refinance volume.
Fannie’s single-family volume was $172.3 billion in the second quarter of 2022, a decrease of 28 percent compared with $239.5 billion in the first quarter of 2022. Purchase acquisition volume increased from $104 billion in the first quarter to $111.0 billion in the second quarter of 2022, of which nearly 50 percent was for first-time homebuyers. Refinance acquisition volume was $61.3 billion in the second quarter of 2022, a decline from $135.5 billion in the first quarter of 2022.
The company said it acquired approximately 334,000 home purchase loans and 240,000 single-family refinance loans during the second quarter of 2022. It also financed approximately 156,000 units of rental housing in the quarter, a significant majority of which were affordable to households earning at or below 120 percent of area median income.
Freddie reported that its quarterly single-family new business activity fell year-over-year by 52 percent to $138 billion. Its multifamily segment, on the other hand, reported a 15 percent increase in year-over-year new business activity, totaling $15 billion in the second quarter of this year.
The company reported 617,000 home and rental units financed during the quarter, including 149,000 multifamily rental units, 80 percent of which were affordable to low-income families.
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.
