Fannie Mae and Freddie Mac created ‘critical supervisory concerns’ last year, with continuing credit losses coming primarily from loans originated during the years 2005 to 2007, according to the fourth annual ‘Report to Congress’ provided by the Federal Housing Finance Agency (FHFA).
According to the FHFA, key challenges facing Fannie Mae and Freddie Mac include the ongoing stress in the nation's housing markets, the challenging economic environment, and the uncertain future facing the government-sponsored enterprises (GSEs). Both Fannie Mae and Freddie Mac guaranteed roughly $100 billion per month in new mortgages last year – three of every four mortgages originated in 2011. As of the end of last year, the cumulative draws on the U.S. Treasury from Fannie Mae and Freddie Mac totaled $187.5 billion.
The FHFA has also reported on the other GSE under its regulatory authority, the Federal Home Loan Banks (FHLBanks). The FHFA found that all 12 of these banks recorded positive annual earnings last year, with total assets of $766.4 billion – a drop from $878.3 billion in 2010. The FHFA says last year's financial condition and performance of the FHLBanks remained fairly stable, although several FHLBanks continued to be negatively affected by their exposure to private-label mortgage-backed securities.
The FHFA's full report is now online.
