Both GSEs Post Profitable 2023 Earnings Reports

As rates edged toward the 8%-mark for part of 2023, the housing market still proved to be on solid footing as both government-sponsored enterprises (GSEs) posted profitable year-end 2023 earnings.

Fannie Mae reported a net income of $17.4 billion for 2023, and $3.9 billion for Q4 2023, according to the GSEs’ latest earnings report, with net worth reaching $77.7 billion as of December 31, 2023.

“The fourth quarter capped another successful year. Fannie Mae reported $3.9 billion in net income, marking our 24th consecutive quarter of positive earnings,” said Fannie Mae CEO Priscilla Almodovar. “In 2023, we delivered $17.4 billion in earnings and continued to rebuild our capital and further strengthen our financial stability. It was a challenging year for housing, with higher mortgage rates, limited homes for sale, and high home prices weighing on affordability. Against this backdrop, we provided $369 billion in liquidity, helping 1.5 million households buy, refinance, or rent a home. As we close on our 85th year supporting America’s housing system, we remain committed to effectively managing risks and being a reliable source of mortgage credit for America’s homeowners and renters.”

The U.S. weekly average 30-year fixed-rate mortgage rate (FRM) increased from 6.42% at the end of 2022, to an average of 6.61% at the end of 2023. Fannie Mae reported that home prices grew 7.1% on a national basis in 2023.

Freddie Mac reported a net income of $2.9 billion for Q4 of 2023, and $10.5 billion for full-year 2023, making homeownership possible for 1.4 million households in 2023, according to their earnings report. The GSE financed 955,000 mortgages, with 56% of eligible loans being affordable to low- to moderate-income families, enabling 375,000 first-time homebuyers to purchase a home.

Freddie Mac also financed 447,000 rental units, with 92% of eligible units being affordable to low- to moderate-income families.

The net income of $2.9 billion reported by Freddie Mac was an increase of 65% year-over-year, primarily driven by higher net revenues and a credit reserve release in Single-Family in Q4 of 2023, compared to a credit reserve build in Single-Family in Q4 of 2022.

“In 2023, Freddie Mac delivered on its mission, achieved solid financial results, and meaningfully increased its net worth,” said Michael J. DeVito, Freddie Mac CEO. “The company helped more than 1.4 million families buy, refinance, or rent a home, and worked with lenders to reach more borrowers in underserved areas. Freddie Mac also set a new milestone, financing a higher proportion of loans for first-time homebuyers than in any year since we started tracking that statistic three decades ago.”

Additional earnings highlights reported by Fannie Mae throughout calendar year 2023 included:

  • Net income increased $4.5 billion in 2023 compared to 2022, primarily driven by a $7.9 billion shift to a benefit for credit losses in 2023 from provision for credit losses in 2022.
  • The GSE reported $369 billion in liquidity provided in 2023, which enabled the financing of approximately 1.5 million home purchases, refinancings, and rental units.
  • Fannie Mae acquired approximately 805,000 single-family purchase loans, of which more than 45% were for first-time homebuyers, and approximately 179,000 single-family refinance loans during 2023.
  • Financed approximately 482,000 units of multifamily rental housing in 2023; a significant majority were affordable to households earning at or below 120% of the area median income (AMI), providing support for both workforce and affordable housing.

Additional earnings highlights reported by Freddie Mac throughout calendar year 2023 included:

  • Net revenues of $5.4 billion, an increase of 11% year-over-year, driven by higher net interest income and non-interest income.
  • Benefit for credit losses of $0.5 billion, primarily driven by a credit reserve release in Single-Family due to improvements in house prices nationwide.
  • New business activity of $73 billion, down 3% year-over-year, as both home purchase and refinance activity were affected by higher mortgage interest rates. Full-year 2023 activity of $300 billion, down 45% year-over-year.
  • Mortgage portfolio of $3 trillion, up 2% year-over-year, as portfolio growth moderated in 2023 due to the slowdown in new business activity.
  • Serious delinquency rate of 0.55%, down from 0.66% at December 31, 2022.
  • Completed approximately 19,000 loan workouts.
  • Freddie Mac reported that 61% of its mortgage portfolio covered by credit enhancements.
  • New business activity of $16 billion, down 45% year-over-year, as higher mortgage interest rates have reduced demand for multifamily financing. Full-year 2023 activity of $48 billion, down 34% year-over-year.
  • Mortgage portfolio of $441 billion, up 3% year-over-year, as portfolio growth moderated in 2023 due to the slowdown in new business activity.
  • Delinquency rate of 0.28%, up from 0.12% at December 31, 2022.
  • Freddie Mac reported that 94% of its mortgage portfolio covered by credit enhancements.

Click here to access Fannie Mae’s full 2023 earnings report, and click here to access Freddie Mac’s full 2023 earnings report.

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Eric C. Peck

Eric C. Peck

Eric C. Peck has 25-plus years’ experience covering the mortgage industry, most recently serving as Editor-in-Chief for National Mortgage Professional Magazine. He 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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