FHFA Releases Report on the GSEs’ Financial Condition

On August 27, the Federal Housing Finance Agency (FHFA) released its first quarterly report on the financial condition of the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac.

The report, entitled the Conservator’s Report on the Enterprises’ Financial Condition, provides information on the GSEs’ presence in the mortgage market, credit quality of mortgage purchases, sources of losses and capital reductions, and loss mitigation activity.  The publication includes data from 2004 to 2010 and attempts to document the financial practices of the GSEs leading up to and during conservatorship.  

According to the report, from the end of 2007 through the second quarter of 2010 the GSEs’ total combined capital decreased by $226 billion.  Most of these losses, $166 billion or 73%, came from claims on single-family loan guarantees.  An additional $21 billion, or 9%, came from investment losses. 

During conservatorship, single-family mortgages acquired by the GSEs have experienced lower early cumulative default rates.  In general, purchases of nontraditional and higher-risk mortgages are down dramatically since the GSEs were placed under conservatorship in September 2008.

The report also tracks the progress of the Making Home Affordable program announced by the Administration in early 2009.  The program, together with the GSEs’ enhanced loss mitigation programs, helps to expand the options available to delinquent borrowers to retain or give up their homes while avoiding foreclosure.  Loss mitigation actions include loan modifications, repayment plans, forbearance plans, short sales, and deeds-in-lieu of foreclosure.

For all of NCSHA’s coverage of issues pertaining to GSEs, click here.