Sen. Pat Toomey, R-PA, argued that the Democrats’ $1.9 trillion COVID relief bill and the Federal Reserve’s bond purchases are no longer necessary, and that more targeted, less costly measures are in order.
So far, performance of the multifamily businesses of Fannie Mae and Freddie Mac in 2021 resembles 2020. It’s not clear if these similarities will persist.
In late 2020, Fannie came back into credit-risk transfers with a bespoke deal with one of its largest nonbank sellers. Freddie continued full speed ahead with more traditional STACR issuance. (Includes data chart.)
Due to COVID-related forbearances, Freddie faced a $2.2 billion increase in its provisions for losses in 2020. However, that expense was more than offset by an across the board increase in revenues.
Profits in the fourth quarter weren’t enough to offset losses incurred earlier in the year by Annaly and Two Harbors. Meanwhile, a REIT with a non-agency focus turned a profit.
Net interest income for the capital markets business came to a measly $522 million for the year. The segment posted actual losses from investments and other sources, producing just $25 million in net revenue.
There was still gas in the tank in January as agency MBS issuance rose slightly from the previous month. Fannie saw the biggest gain, while Freddie business fell. (Includes two data charts.)
One of the largest REIT investors in the MBS market took a loss of $266 million in 2020, with gains in the final three quarters unable to wipe out the red ink posted in the first quarter. Still, officials at AGNC are optimistic about the future.
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