The Federal Housing Finance Agency (FHFA) has released its first Conservator’s Report on the Enterprises’ Financial Condition. The Conservator’s Report provides an overview of key aspects of the financial condition of Fannie Mae and Freddie Mac (the government-sponsored enterprises) during conservatorship. The report will be released on a quarterly basis following the filing of the Enterprises’ financial results with the Securities and Exchange Commission (SEC).
“FHFA initiated the Conservator’s Report to enhance public understanding of Fannie Mae’s and Freddie Mac’s financial performance and condition leading up to and during conservatorship,” said FHFA Acting Director Edward J. DeMarco.
The report includes information on the GSEs presence in the mortgage market; credit quality
of GSEs' mortgage purchases; sources of the GSEs losses and capital reductions; and
the GSEs' loss mitigation activity. Information presented in the report includes:
►The key driver in the decline of the GSEs’ capital from the end of 2007 through the
second quarter of 2010 was the Single-Family Credit Guarantee business segment, which
accounted for 73 percent of the capital reduction over that period. The bulk of this capital
reduction was associated with losses from mortgages originated in 2006 and 2007.
►The Investments and Capital Markets business segment (which includes the retained
portfolio and credit losses associated with private-label mortgage-backed securities)
accounted for nine percent of the capital reduction over the same period.
►Since the establishment of the conservatorships, the credit quality of the Enterprises’ new
mortgage acquisitions has improved substantially. Single-family mortgages acquired by the
GSEs during conservatorship have, on average, higher credit scores and lower loan-to-
value (LTV) ratios, resulting in lower early cumulative default rates.
Click here to view a copy of the first-ever Conservator’s Report on the Enterprises’ Financial Condition.
For more information, visit www.fhfa.gov.
