Fannie, Freddie Boost Their Net Worths With Profitable 2021
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac reported positive financial results for 2021 and were able to add to their net worths by not having to pay dividends to the U.S. Treasury.
Fannie Mae reported annual net income of $22.2 billion, nearly double the $11.8 billion it earned in 2020. The company said the increase was driven primarily by a shift from credit-related expense to credit-related income, higher net interest income, and a shift from fair value losses to fair value gains.
Not having to pay a Treasury dividend out of those profits means Fannie nearly doubled its net worth last year, from $25.3 at the end of 2020 to $47.4 billion at the end of 2021.
Fannie’s fourth quarter income was $5.2 billion, up slightly from $4.8 billion in the previous quarter and $4.6 billion during the fourth quarter of 2020.
Fannie provided $1.4 trillion in liquidity to the single-family and multifamily mortgage markets in 2021. That equaled the amount of liquidity provided in 2020, which was more than double provided the previous three years.
It made $451.3 billion of single-family home purchase acquisitions in 2021, its highest on record. Nearly half of those acquisitions were for first-time homebuyers. The company acquired 1.5 million home purchase loans and 3.3 million refinance loans last year.
About 0.7 percent of Fannie's single-family guaranty book of business based on loan count, or 117,440 loans, was in forbearance, the vast majority of which was related to the COVID-19 pandemic. That's down from 3 percent at the end of 2020. Since the start of the pandemic, 88 percent of loans that entered forbearance have successfully exited.
Freddie Mac reported net income of $12.1 billion for full-year 2021, an increase of 65 percent year-over-year. These results were primarily driven by higher net revenues and a credit reserve release in single-family, Freddie said in its release. The profitable year boosted Freddie Mac’s net worth to $28 billion.
Fourth-quarter net income was $2.7 billion, a slight decrease from $2.9 billion in the third quarter and a decrease of 6 percent year-over-year. Freddie said its higher net revenues were offset by an increase in credit-related expense.
Freddie’s single-family new business activity was $1.2 trillion for the year, up 12 percent from the previous year. Multi-family activity totaled $70 billion, down 16 percent from 2020.
The company provided funding for approximately 1 million single-family loans, nearly 598,000 of which were refinance loans. First-time homebuyers represented 46 percent of new single-family home purchase loans.
About 0.57 percent of loans in Freddie’s single-family mortgage portfolio, based on loan count, were in forbearance as of December 31, 2021. That's down from 2.7 percent in the fourth quarter of 2020. More than 858,000 forbearance plans have been initiated to help borrowers since January 1, 2020. As of December 31, 2021, approximately 791,000 of these loans have exited forbearance, including 330,000 through reinstatement or payoff and 374,000 through payment deferral.
About the Author
As an NAMP® 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.
