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Over Half of GSE Taxpayer Profits From Freddie

In multiple respects, Freddie Mac is in the neighborhood of a third smaller than Fannie Mae. But Fannie is a little less dominant in the race to finance apartment units, while Freddie is responsible for more than half of the nearly $40 billion netted on behalf of U.S. taxpayers to finance both firms’ bailouts.

Fannie reported third-quarter single-family MBS issuance of $105.563 billion, higher than $84.096 billion the prior quarter but worse than $186.459 billion in the year-earlier quarter. Year-to-date issuances amounted to $266.631 billion.

The details were spelled out in 367 PDF pages of 10-Q filings with the Securities and Exchange Commission by the pair of secondary lenders.

Refinance share fell to 43 percent at Fannie from 46 percent in the second quarter and was 47 percent for the first nine months of the year.

Freddie’s report reflected a refinance share of 46 percent for the year.

Fannie’s mortgage insurance risk in force was $107.258 billion as of Sept. 30. United Guaranty Residential Insurance Co. was the biggest mortgage insurer for Fannie with $24.3 billion in force. Radian Guaranty Inc. followed with $23.8 billion, then Mortgage Guaranty Insurance Corp.’s $21.7 billion, Genworth Mortgage Insurance Corp.’s $15.2 billion and PMI Mortgage Insurance Co.’s $6.2 billion.

Over at Freddie, the third quarter closed out with $220.471 billion in mortgages insured with $55.941 billion in coverage.

Radian topped Freddie’s list with $48.9 billion in primary insurance. MGIC was No. 2 with $47.5 billion, then $47.2 billion at United Guaranty Residential Insurance Co., $30.7 billion at Genworth and $15.4 billion at Essent Guaranty Inc.

Freddie’s report cited Federal Reserve Board data indicating that total U.S. single-family loans finished June at $9.855 trillion, falling from $9.922 trillion as of Sept. 30, 2013.

Fannie said it had $17.253 billion in new business volume used to finance 289,000 multifamily units during the nine months ended Sept. 30. Multifamily MBS issuances amounted to $20.087 billion during the same period.

New multifamily financing of $6.947 billion at Freddie financed 100,555 housing units in just the third quarter. So far this year, 213,909 multifamily units have been financed with $14.062 billion in new business activity.

Income before income taxes at Washington-based Fannie was $5.7 billion, up from $5.4 billion the previous quarter but lower than $10.1 billion in the year-earlier period.

“Pre-tax income decreased in the third quarter of 2014 compared with the third quarter of 2013 primarily due to a decrease in credit-related income, which was partially offset by an increase in guaranty fee income and the recognition of net interest income in the third quarter of 2014 compared with a net interest loss recognized in the third quarter of 2013,” Fannie’s report said.

Over at McLean, Va.-based Freddie, income before taxes climbed to $3.0 billion from $2.0 billion but wasn’t as good as $6.5 billion earned in the third-quarter 2013.

Fannie said it plans to make a $4.0 billion dividend payment to the Department of the Treasury, bringing its life-to-date payments to $134.5 billion. Draws taken by Fannie total $116.1 billion.

Freddie will pay a $2.8 billion dividend to the Treasury, bringing its life-to-date payments to $91.0 billion. Freddie has taken out $71.3 billion in draws from the Treasury

In all, the government has taken in $38.1 billion more than the $187.4 billion it invested in the pair of housing finance giants. Net profits include $18.4 billion from Fannie and $19.7 billion from Freddie.

2014 Comparison of Fannie Mae and Freddie Mac
(as of Sept. 30 – dollars in billions)


Fannie Freddie
Mortgage Credit Book of Business $2,883.5 $1,898.3
Business Purchases or Issuances YTD $305.8 $201.3
Refinance Share of YTD Business Volume 47% 46%
Single-Family MBS issuance YTD $266.6 $189
Multifamily New Business Volume YTD $17.3 $14.1
Multifamily Units YTD (financed from new business volume) 289,000 213,909
Multifamily MBS Issuance YTD $20.1 $12.9
Total Mortgage Loan Assets (net of loan loss allowance) $3,010.2 $1,691.0
90-day residential delinquency 1.96% 1.96%
Multifamily 60-day Delinquency 0.09% 0.03%
Pre-Tax Income YTD $19.0 $10.8
Treasury Draws life-to-date $116.1 $71.3
Dividend Payments to Treasury life-to-date $134.5 $91.0

An August 2011 lawsuit filed in U.S. District Court for the District of Columbia by the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio challenging a Federal Housing Finance Agency rule preventing the payment of litigation claims during conservatorship was dismissed by the plaintiffs in October..

Fannie described an uncertain future for residential lending.

“We expect continued significant uncertainty regarding the future of our company and the housing finance system, including how long the company will continue to be in its current form, the extent of our role in the market, what form we will have, what ownership interest, if any, our current common and preferred stockholders will hold in us after the conservatorship is terminated and whether we will continue to exist following conservatorship.

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