Fitch: GSE Outlook in 2014 Still Good

CHICAGO—Freddie Mac made a strong showing in last year’s fourth quarter, according to an earnings report it released last week, capping a year of great results for the GSEs. But Chicago-based Fitch Ratings says much of this good news reflects the impact of several one-time events which probably won’t occur in 2014. However, Fitch still expects that the GSEs will continue their profitable ways in the coming year due to increased guarantee fees and improving mortgage credit quality.

Fannie Mae and Freddie Mac had a combined 2013 net income of $133 billion. Their numbers were boosted by deferred tax allowance valuation reversals, RMBS lawsuit settlements, representation and warranty settlements, and an improvement in the housing market which helped drive decreases in loan loss reserves.