GSEs Report Combined $7 Billion in Third-quarter Net Income
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac produced profitable third quarter financial results consistent with recent trends.
The government-sponsored enterprises released third-quarter results last week, with Fannie Mae reporting a $4 billion quarterly profit and Freddie Mac reporting $3.1 billion in net income.
Fannie Mae’s net income was down by $440 million from the second quarter of this year and by around $700 million on a year-over-year basis. The company’s net income for all of the previous five quarters has been between $3.9 billion and $4.7 billion.
These consistent results have pushed Fannie’s net worth to over $90 billion as of the end of the quarter. That is around $13 billion more than its net worth at the end of last year. It also marks a 258 percent increase in its net work since the end of 2020.
Fannie provided $106 billion in liquidity during the quarter, which enabled the financing of approximately 383,000 home purchases, refinancings, and rental units. It also acquired approximately 231,000 single-family purchase loans, of which approximately half were for first-time homebuyers, and approximately 50,000 single-family refinance loans during the quarter. Fannie also financed roughly103,000 units of multifamily rental housing which a significant majority being affordable to households earning at or below 120 percent of area median income.
Fannie reported single-family acquisition volume of $93.1 billion during the quarter, up from $85.9 billion in the previous quarter. Both purchase and refinance business were up from the previous quarter.
Overall net income for the segment fell 9 percent from the second quarter and by 13 percent on a year-to-year basis. Fannie said this was due to a significant drop in fair value gains mostly caused by declining interest rates during the quarter.
Fannie’s multifamily segment reported $13.2 billion in volume for the third quarter, up from $9.3 billion in the second quarter.
“Fannie Mae had a strong third quarter, earning $4 billion in net income and marking our 27th quarter of consecutive, positive results,” said CEO Priscilla Almodovar. This demonstrates our continued progress in transforming our business and strengthening our balance sheet, so that we fulfill our mission in any economic environment.”
Freddie Mac’s $3.1 billion in net income was a 15.6 percent improvement over the same quarter a year ago and 12.3 percent better than this year’s second quarter. The results pushed Freddie’s overall net worth up 26.3 percent to $56.4 billion.
Overall, Freddie provided $113 billion in liquidity during the quarter, financing 415,000 homes and rental units.
The company financed 284,000 mortgages, with 51 percent of eligible loans affordable to low- to moderate-income families. First-time homebuyers represented 51 percent of new single-family home purchase loans. Freddie also financed 131,000 rental units, with 94 percent of eligible units affordable to low- to moderate-income families.
The company’s single-family segment accounted for $2.6 billion in net income, an increase of 11 percent year-over-year.
Its single-family new business activity was $98 billion, up from $85 billion in the third quarter of 2023, as both home purchase and refinance volume increased due to lower mortgage interest rates.
Lower mortgage rates also boosted multifamily new business activity from $13 billion in the third quarter of 2023 to $15 billion this most recent quarter. Multifamily net income was $532 million, a 10.6 percent increase over the previous quarter and a 47 percent increase year-over-year.
Freddie Mac delivered another strong quarter, earning net income of $3.1 billion and increasing the company’s net worth to $56 billion,” said CEO Diana W. Reid. “We expanded support for renters, including by establishing a new grace period for rent payments. We also are providing relief to homeowners and resources for renters affected by recent hurricanes.”
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.