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Fannie Mae, Freddie Mac Profit Growth Slows in Q3

first_imgSubscribe The Best Markets For Residential Property Investors 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago The Best Markets For Residential Property Investors 2 days ago Sign up for DS News Daily The Week Ahead: Nearing the Forbearance Exit 2 days ago Share Save Tagged with: Fannie Mae Freddie Mac GSE Profits Mortgage-Backed Securities Secondary Market Previous: International Document Services Forms New Integrations Team Next: With Recent Republican Victories, Is GSE Reform Possible? Home / Daily Dose / Fannie Mae, Freddie Mac Profit Growth Slows in Q3 Data Provider Black Knight to Acquire Top of Mind 2 days ago Demand Propels Home Prices Upward 2 days ago  Print This Post Related Articles Servicers Navigate the Post-Pandemic World 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago About Author: Tory Barringer Fannie Mae, Freddie Mac Profit Growth Slows in Q3 Servicers Navigate the Post-Pandemic World 2 days ago Tory Barringer began his journalism career in early 2011, working as a writer for the University of Texas at Arlington’s student newspaper before joining the DS News team in 2012. In addition to contributing to DSNews.com, he is also the online editor for DS News’ sister publication, MReport, which focuses on mortgage banking news. Fannie Mae Freddie Mac GSE Profits Mortgage-Backed Securities Secondary Market 2014-11-06 Tory Barringer Fannie Mae and Freddie Mac are set to send another $6.8 billion to the U.S. Treasury after posting a mild increase in profits for the third quarter.For its part, Fannie Mae reported net income of $3.9 billion for the third quarter, up from a profit of $3.7 billion in Q2 but down from $8.7 billion from a year ago.According to Fannie Mae, the increase was driven primarily by lower fair value losses and an increase in revenues. Also contributing to the third-quarter boost in profits was a recently announced settlement between Goldman Sachs and the GSEs’ conservator, the Federal Housing Finance Agency (FHFA), over faulty residential mortgage-backed securities (RMBS).In a sour sign for the housing market, a shrinking portion of Fannie Mae’s earnings stemmed from credit-related income—$836 million compared to $1.9 billion the prior quarter. The company said the decrease was mostly due to a decline in its benefit for credit losses as home price appreciation continues to slow.Fannie Mae also acknowledged that a growing share of its revenues in recent years have come from increases in guaranty fees, a trend the company expects will continue as its mortgage portfolio contracts.Meanwhile, Freddie Mac reported net income of $2.1 billion for Q3, up from $1.4 billion the prior three-month period. The company attributed the increase to lower derivative losses (stemming from an upturn in long-term interest rates) and the same RMBS settlement that benefited Fannie Mae.Those improvements were counterbalanced against a drop in Freddie Mac’s provision for credit losses “driven by a slight worsening in loss severity,” the company said.As a result of their profitable quarter, Fannie Mae says it expects to pay $4.0 billion in dividends to Treasury in December, while Freddie Mac will pay $2.8 billion.By the end of this year, the two GSEs, which have been in conservatorship since 2008, will have returned a combined $225.5 billion to taxpayers—nearly $40 billion more than the amount the two companies were forced to draw to keep afloat in the aftermath of the financial crisis. Despite that, the GSEs’ agreement with the government stipulates they must continue to pay.That agreement has drawn the ire of the companies’ shareholders, some of whom are trying to take the government to court on claims it has robbed them of their share of the profits and kept the GSEs from being able to return to normalcy.Meanwhile, Washington continues to debate on what should happen to the two mortgage giants as policymakers work to revive private-label securitization and diminish the government’s role in the market. While there has been some support for plans to wind down the GSEs and replace them with a government corporation, those plans remain up in the air in the wake of Republicans’ takeover of the Senate. in Daily Dose, Featured, News, Secondary Market November 6, 2014 791 Views Demand Propels Home Prices Upward 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days agolast_img read more

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