Fannie Mae Net Worth Up, But It Remains 'Significantly' Undercapitalized – NMP Skip to main content

Fannie Mae Net Worth Up, But It Remains 'Significantly' Undercapitalized

Feb 14, 2023
Fannie Mae HQ

Earnings drop more than 40% in both Q4 and for the full year.

KEY TAKEAWAYS
  • Posted net income of $1.4 billion, down 41% from $2.44 billion in the third quarter
  • For the full year, Fannie Mae reported net income of $12.9 billion, down 42% from $22.18 billion for all of 2021.

The Federal National Mortgage Association, or Fannie Mae, remains severely undercapitalized.

The government-sponsored enterprise on Tuesday reported earnings for the fourth quarter and full year of 2022 that reflected the downturn in the housing market. Fannie Mae posted net income of $1.4 billion, down 41% from $2.44 billion in the third quarter. It said the earnings decline was primarily driven by a $11.4 billion shift to provision for credit losses and a $1.6 billion shift to investment losses, partially offset by a $1.1 billion increase in fair value gains.

For the full year, Fannie Mae reported net income of $12.9 billion, down 42% from $22.18 billion for all of 2021. For the year, it reported a net worth of $60.3 billion as of Dec. 31, up from $58.8 billion in the third quarter last year.

While its net worth continues to increase, Fannie Mae also reported that it remains “significantly undercapitalized,” with a shortfall of $258 billion. That is not significantly different from the shortfall of $262 billion the enterprise cited for the second quarter of last year.

“Our 2022 results reflect a housing market in transition,” said Priscilla Almovodar, Fannie Mae CEO. “We’re proud that Fannie Mae helped approximately 2.6 million households buy, refinance, or rent a home last year, while generating solid earnings and continuing to build our net worth.”

She added that the enterprise expects “there will be economic headwinds in 2023 and that housing affordability will continue to remain a challenge for many homebuyers and renters. We also know that Fannie Mae has the capabilities and dedication to help provide liquidity and stability, and to support home-buyers and renters throughout all economic cycles.” 

Key Highlights

Here are some key highlights from Fannie Mae’s report:

  • Fannie Mae acquired approximately 1.15 million single-family purchase loans, of which more than 45% were for first-time homebuyers, and 886,000 single-family refinance loans during 2022.
  • It financed approximately 598,000 units of rental housing in 2022, a significant majority of which were affordable to households earning at or below 120% of area median income, providing support for both workforce and affordable housing.
  • Investment losses were $297 million in 2022, compared with investment gains of $1.4 billion in 2021. Net investment losses in 2022 were primarily driven by a significant decrease in the market value of single-family loans that resulted in valuation losses on loans held-for-sale at period-end, as well as lower prices on loans sold during the year.

Segment Highlights

Single-Family:

  • Single-family conventional acquisition volume was $614.8 billion in 2022, down 55% from $1.4 trillion in 2021. Purchase acquisition volume decreased from $451.3 billion in 2021 to $378 billion in 2022, of which more than 45% was for first-time homebuyers.
  • Refinance acquisition volume was $236.9 billion in 2022, a decline from $903.7 billion in 2021, due to the higher mortgage interest-rate environment. The share of purchase loans, which generally have a higher loan-to-value ratio, increased as a percentage of the company’s single-family acquisitions to 62% in 2022 from 33% in 2021.
  • Average single-family conventional guaranty book of business in 2022 increased from 2021 by 7% driven primarily by growth in the average balance of loans acquired during the year. 

Multifamly:

  • New multifamily business volume was $69.2 billion in 2022, compared with $69.5 billion in 2021. The 2022 Federal Housing Finance Agency (FHFA) multifamily volume cap was $78 billion and a minimum of 50% of the company’s 2022 multifamily loan purchases were required to be mission-driven, focused on specified affordable and underserved market segments. The company’s 2022 multifamily business volume remained under the cap and it met the mission requirements established by FHFA.
  • The multifamily guaranty book of business grew by approximately 7% in 2022 to $440.4 billion. The average charged guaranty fee on the multifamily book remained generally flat at 78.5 basis points as of Dec. 31, 2022, compared with 78.4 basis points as of December 31, 2021.
  • The multifamily business segment had net income of $2.2 billion and net revenues of $4.8 billion for 2022. In the fourth quarter, the segment recognized a $1.1 billion provision for credit losses, approximately $900 million of which related to the company’s seniors housing portfolio. This provision drove a $52 million net loss for the quarter.
About the author
David Krechevsky was an editor at NMP.
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