Concern over the third quarter losses posted by Fannie Mae and Freddie Mac may be obscuring the excellent performance of multifamily business lines in the government-sponsored enterprises' most recent reports.
While Fannie Mae lost $5.1 billion and Freddie Mac $4.4 billion in the three-month period, those losses come from the single-family business the two enterprises run, and separating the multifamily side paints a very different picture.
The real estate data released in the report shows the multifamily divisions of the two GSEs are actually turning a profit and making money for taxpayers despite the outcry over their requests for further funding from the federal government.
This is due partly to a smaller amount of real estate-owned business and lower default rates, according to Multifamily Executive. The divisions have also maintained a focus on affordable housing far in excess of their single-family counterparts despite a smaller absolute size, MFE indicates.
Fannie Mae's multifamily division has fewer than 300 REO properties in inventory and a delinquency rate of 0.57 percent, compared to 4 percent delinquency for its single-family portfolio. While the GSE's single-family net income went from losses of $27 billion in 2010 to losing $19 billion in the first three quarters this year, multifamily income rose from $216 million to more than $405 million in the same period.
Between the two of them, the GSEs have almost 460,000 affordable multifamily housing units, a much larger percentage of their apartment portfolio than their single-family holdings can boast. According to MFE, the data may strengthen the case for separating the single-family and multifamily aspects of their business from each other when legislators formulate GSE policy.