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GSEs Report Strong Q3 Results

Both Fannie Mae and Freddie Mac announced their third quarter earnings reports, as both government-sponsored enterprises (GSEs) demonstrated continued growth heading into Q4.

Fannie Mae reported $4.8 billion in net income and $7.1  billion in net revenue in Q3, up from $4.2 billion in net income and $6.7 billion in net revenue in Q3 of 2020.

Freddie Mac’s net income came in at $2.9 billion for Q3, a 19% year-over-year rise, powered by higher net revenues and a credit reserve release in its Single-Family Division. Freddie Mac also reported net revenues of $5.2 billion, an increase of 4% year-over-year, driven by mortgage portfolio growth and higher average portfolio guarantee fee (G-fee) rates.

“We are pleased that Freddie Mac's third quarter results showed 19% year-over-year growth in net income and comprehensive income, which enabled us to add $2.9 billion to our net worth,” said Michael J. DeVito, CEO of Freddie Mac. “These strong results allow the company to serve its mission of providing liquidity, stability, and affordability to the housing market–and to do so expansively by making home possible for owners and renters across the country and in all economic environments.”

To close out Q3, Fannie Mae’s net worth rose to $42.2 billion, while Freddie Mac reported a net worth of $25.3 billion.

“It was another strong quarter for the housing market and for Fannie Mae. Our results reflect the credit quality of our guaranty book, a growing economy, strong home price growth, and low interest rates,” said Fannie Mae CEO Hugh R. Frater in a release. “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.”

Knock, a digital homeownership platform, recently reported that many potential homebuyers are being priced out of the new home market. That same report noted that while an increase in new construction has been beneficial for buyers, the soaring cost of materials and low inventory continue to be hurdles for potential buyers.

Since the outset of the pandemic, the GSEs have work with the nation’s homebuyers and renters to ensure that they were able to maintain their housing needs despite the state of the nation’s economic backdrop.

Through Q3, Fannie Mae reported that nearly 1.4 million single-family forbearance plans were initiated to assist borrowers, with approximately 1.2 million of these loans having exited forbearance, including approximately 727,000 through reinstatement or payoff, and approximately 359,000 through the company’s payment deferral option.

“We look forward to continuing to work with FHFA and others in the housing and mortgage finance markets on the many challenges facing borrowers and renters,” said Frater in a conference call.

Freddie Mac noted that it completed approximately 73,000 loan workouts through the end of Q3, and through its financing, made it possible for 415,000 families to purchase a home, including 46% first-time homebuyers.

Additional Q3 highlights from Fannie Mae’s Q3 report includes:

  • $312.7 billion in liquidity provided to the Single-Family and Multifamily mortgage markets in Q3
  • $115.4 billion in Single-Family home purchase acquisitions in Q3, in which nearly 50% were for first-time homebuyers
  • Approximately 166,000 units of rental housing were financed in Q3, more than 90% of which were affordable to families earning at or below 120% of area median income (AMI)

Additional highlights from Fannie Mae’s Q3 report includes:

  • The financing of 161,000 rental units, with 94% of those for low- to moderate-income families
  • New business activity of $299 billion, down 11% year-over-year, as refis activity cooled from all-time highs in 2020
  • A mortgage portfolio of $2,682 billion, up 23% year-over-year

Click here to view Fannie Mae’s Q3 earnings report, and click here to view Freddie Mac’s Q3 earnings report.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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