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GSE Quarterly Results: An Important Step Toward Privatization

Fannie Mae reported a net income and a comprehensive income of $4.0 Billion for Q3 2019, up from a net income of $3.4 billion and comprehensive income of $3.4 billion for the second quarter of 2019, while Freddie Mac posted a $1.7 Billion net income. According to the GSEs, these incomes represent yet another step toward adding the capital necessary to move toward private ownership.

“In the third quarter, Freddie Mac took an important first step toward exiting conservatorship by adding more than $1.8 billion to our total equity, bringing our capital reserve to $6.7 billion,” said David M. Brickman, Freddie Mac CEO. “As we look to the future, we are squarely focused on serving our mission and meeting the milestones necessary to move the company forward.”

“Our strong quarterly results demonstrate the strength of Fannie Mae’s business and our ability to dynamically manage credit while serving the needs of our customers,” said Hugh R. Frater, Fannie Mae CEO. “We are focused on preparing for an eventual exit from conservatorship and providing liquidity for housing for low- and moderate-income Americans. “We will continue to work with our customers and partners to provide sustainable and stable sources of financing for affordable.”

Fannie Mae was the largest issuer of single-family mortgage-related securities in the secondary market during the first nine months of 2019. The company’s estimated market share of new single-family mortgage-related securities issuances was 39% for the third quarter of 2019.

Freddie Mac reports that conservatorship capital reduced by $5.2 billion from the prior year, due in part to credit risk transfer (CRT) activity, home price appreciation, legacy asset dispositions, and a decrease in deferred tax assets.

The Federal Housing Finance Agency (FHFA) recently released a new Strategic Plan for the Conservatorships of Fannie Mae and Freddie Mac and a new 2020 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions. According to the FHFA, the three objectives of this new Strategic Plan and Scorecard are to ensure that the GSEs foster competitive, liquid, efficient, and resilient (CLEAR) national ​housing finance markets; operate in a safe and sound manner appropriate for entities in conservatorship; and prepare for their eventual exits from the conservatorships.

“Our nation’s mortgage finance system is in urgent need of reform,” said FHFA Director Mark Calabria. “The vision for reform articulated in the Strategic Plan and advanced in the Scorecard will serve borrowers and renters by preserving mortgage credit availability, protect taxpayers by ensuring Fannie Mae and Freddie Mac can withstand an economic downturn, and support a strong and resilient secondary mortgage market.”

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.
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