McLEAN, VA-Fannie Mae and Freddie Mac may still be in government conservatorship, but they are not going under the sequester axe. That is because they are private corporations chartered by Congress—a fine distinction given their support by the government, but an important one as the sequester gets underway.
The GSEs, though, are posting strong performance, especially their multifamily units, which presumably would cushion any cuts if they were to be subject to them.
Freddie Mac just released its year-end figures for its multifamily business segment, producing record earnings of $2.1 billion, up 63% from prior year. It posted record annual loan funding of $28.8 billion, up 42% from 2011. Credit losses were $34 million, less than 3 basis points of the total multifamily mortgage portfolio.
For the fourth quarter of 2012, Freddie Mac's multifamily segment had earnings of $494 million, compared to $710 million for the third quarter of 2012. The decrease was primarily driven by lower gains on mortgage loans recorded at fair value and lower gains on sales of mortgage loans in the fourth quarter of 2012, Freddie Mac said.
Freddie Mac recently issued its third multifamily-backed Structured Pass-Through Certificates--aka its K-Certificates--for 2013. This offering, at $900 million, was slightly smaller than the usual volume; however it was based exclusively on five-year paper. Such loans are not as popular now, with the low interest rates, and it takes longer to originate.
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