GSEs Report Solid 2023 Financial Results
Written By: Joel Palmer, Op-Ed Writer
Fannie Mae and Freddie Mac reported robust full-year earnings for 2023 due largely in changes to treatments in credit losses and reserves. But steep declines in new business volume demonstrated the challenges of last year’s housing and mortgage markets.
Last week, the two government-sponsored enterprises (GSEs) reported their fourth-quarter and full-year financial results for 2023.
Fannie Mae booked $17.4 billion in net income last year, up 35 percent from the previous year. Fannie said the increase was primarily driven by a $7.9 billion shift to a benefit for credit losses in 2023 from provision for credit losses in 2022. In just the fourth quarter, Fannie’s $3.9 billion in net income was nearly triple the $1.4 billion the company had in the fourth quarter of 2022.
“The fourth quarter capped another successful year,” said Priscilla Almodovar, Fannie Mae CEO. “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.”
Fannie reported $369 billion in liquidity provided in 2023 and the financing of approximately 1.5 million home purchases, refinancings, and rental units. That was down significantly from $684 billion last year and well below the $1.4 trillion in activity that occurred in 2020 and 2021. Single-family purchase volume declined from $378 billion in 2022 to $273 billion in 2023, while refinance acquisitions plummeted from $237 billion to just $43 billion.
Fannie acquired approximately 805,000 single-family purchase loans, of which more than 45 percent were for first-time homebuyers. The GSE also financed about 482,000 units of multifamily rental housing in 2023, a significant majority of which were affordable to households earning at or below 120 percent of area median income.
The company ended the year with a net worth of $77.7 billion, more than triple its worth at the end of 2020.
Freddie Mac reported net income of $10.5 billion for full-year 2023, an increase of 13 percent year-over-year, primarily driven by a credit reserve release in its single-family business in 2023 compared to a credit reserve build in 2022. Net income for the fourth quarter rose 80 percent year-over-year to $2.7 billion.
“In 2023, Freddie Mac delivered on its mission, achieved solid financial results, and meaningfully increased its net worth,” said Freddie Mac CEO Michael J. DeVito. “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.”
Single-family new business activity at Freddie came in at $300 billion for the full year, down 45 percent from the previous year. Multifamily new business activity was $48 billion, down 34 percent year-over-year.
Freddie financed 955,000 mortgages, with 56 percent of eligible loans being affordable to low- to moderate-income families, and enabled 375,000 first-time homebuyers to purchase a home. It also financed 447,000 rental units, with 92 percent of eligible units being affordable to low- to moderate-income families.
Freddie ended the year with a net worth of $47.7 billion, up from $37 billion the previous year.
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.
