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GSE Income Falls YoY in Q3

As the housing market continues its erratic pace to close out 2022, the government-sponsored enterprises (GSEs) have reported their Q3 earnings for the year.

Freddie Mac reported net income of $1.3 billion for Q3 of 2022, a decrease of 55% year-over-year, primarily driven by a credit reserve build in single-family. Fannie Mae reported net income of $2.4 billion for Q3 of 2022, with net worth reaching $58.8 billion as of September 30, 2022.

Freddie Mac revealed in its Q3 earnings that it financed 392,000 mortgages, with 56% of eligible loans being affordable to low- to moderate-income families, and enabled 130,000 first-time homebuyers to purchase a home in the third quarter of 2022. In addition, Freddie Mac financed 150,000 rental units, with 96% of eligible units being affordable to low- to moderate-income families.

“In a dynamic economic environment, Freddie Mac continued to provide much-needed liquidity, stability, and affordability to the housing finance system,” said Michael J. DeVito, CEO of Freddie Mac. “We earned quarterly net income of $1.3 billion and added to the capital that supports our mission. With our focus on risk management, we are actively managing the company to support homebuyers, renters, and the housing market throughout the economic cycle.”

Fannie Mae reported that it provided $134 billion in liquidity to the single-family and multifamily mortgage markets in Q3 of 2022, and of $92 billion in single-family home purchase acquisitions in Q3, more than 45% were for first-time homebuyers. Fannie Mae acquired approximately 285,000 home purchase loans and 99,000 single-family refinance loans during Q3, and reported approximately 143,000 units of rental housing was financed in Q3, a significant majority of which were affordable to households earning at or below 120% of area median income (AMI), providing support for both workforce and affordable housing.

“Our third quarter results reflect the changing conditions in today’s housing market, and in this environment we continue to focus on being a stable pillar for the market, managing risk, and supporting renters and homeowners,” said David C. Benson, President and Interim CEO of Fannie Mae.

Freddie Mac reported net revenues of $5.2 billion in Q3, a decrease of 1% year-over-year, as higher net interest income in single-family was offset by a decline in non-interest income in multifamily. New business activity reported was $121 billion, down 60% year-over-year, as refinance activity slowed significantly due to rising mortgage interest rates, which currently border on the 7% mark. Freddie Mac’s mortgage portfolio was $3.0 trillion, up 11% year-over-year, driven by an increase in average portfolio loan size and a higher share of single-family mortgage debt outstanding.

Fannie Mae’s net income decreased $2.2 billion in Q3 of 2022, compared to Q2 of 2022. The largest driver of this decrease was an increase in credit-related expense. Credit-related expense for Q3 was primarily driven by lower actual and projected home prices. Credit-related expense was $2.5 billion in Q3 of 2022, compared with $251 million in Q2 of 2022. Credit-related expense for Q3 was primarily driven by lower actual and projected home prices during the quarter.

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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