Fannie, Freddie Q1 Profits Drop Year on Year

Fannie Mae’s and Freddie Mac’s combined first-quarter earnings were $2.4 billion, up from the $1.5 billion they earned in the fourth quarter of 2014 but down substantially from the $9.3 billion they earned a year before, the Federal Housing Finance Agency reported today.

The GSEs saw $4.2 billion in losses on derivatives during the first quarter driven by longer-term swap rates. They reduced their loan loss reserves by $8.4 billion due to new FHFA guidelines on when loans are determined to be uncollectible.

Meanwhile, the Federal Home Loan Banks collectively earned $1 billion in the first quarter, up from $553 million in the fourth quarter and similar to levels a year prior. The spike in earnings was driven in part by a $459 million litigation settlement received by the Federal Home Loan Bank of San Francisco. Aggregate advances — which make up 61.6 percent of FHLB assets — fell 5 percent in the first quarter to $542.2 billion.