Government-sponsored mortgage investor Fannie Mae posted a 14.6% year-over-year decline in net income during the fourth quarter, with net revenues of $7.3 billion flat on a quarterly and annual basis, according to a quarterly earnings report released Wednesday.

Fourth-quarter net income of $3.5 billion reflected a 9% decline from the $3.8 billion posted in the third quarter, though the company notably expanded its holdings of single-family mortgages and mortgage-related securities to $123.4 billion in 2025, from $89.3 billion in 2024.

The company’s net worth climbed to $109 billion to end last year, about 3.3% higher than $105.5 billion in the third quarter and up 15% from $94.7 billion a year ago. On a full-year basis, Fannie’s net income declined by roughly 15%, from $17 billion in 2024 to $14.4 billion last year.

The earnings announcement attributed the decline in quarterly net income to “changes in fair value, lower investment gains, and higher administrative expenses,” while the decline in annual earnings was chalked up to a $1.8 billion pivot from a benefit for credit losses to a provision for credit losses, along with a $1.7 billion decline in fair value gains over the year.

For financial reporting purposes, administrative expenses at Fannie Mae include salaries and benefits, professional services and occupancy and technology costs.

‘Administrative expenses’ in the spotlight

Bill Pulte, director of the Federal Housing Finance Agency (FHFA), which has regulated Fannie Mae and fellow government-sponsored enterprise Freddie Mac since they landed in federal conservatorship in 2008, celebrated the decline in annual administrative expenses in a press release.

“For the first time in four years we reduced annual administrative expenses, positioning the company for long-term success,” said Pulte, who installed himself as chairman of Fannie Mae’s and Freddie Mac’s boards last March, soon after becoming director of FHFA. That development came with a significant overhaul of the Fannie and Freddie boards and top brass at both companies.

Amid the quarterly and annual earnings decline reported Wednesday, the company also reported a 9% quarterly and 4% yearly increase in spending on salaries and benefits — despite shedding 1,200 employees over the course of 2025, or about 15% of the company’s workforce.

A Form 10-K filing released Wednesday says “cost reductions from fewer employees and contractors were mostly offset by an increase in severance costs and higher occupancy expenses,” which were $95 million and $55 million higher in 2025, respectively, than 2024.

While total administrative expenses declined by $40 million from 2024 to 2025, reflecting about 1% of improvement in those costs, administrative expenses increased by $102 million, or 12%, from the third quarter to fourth quarter, to land about 3% lower annually.

In fact, amid declining income in the fourth quarter, Fannie’s administrative expense ratio — representing administrative costs as a percentage of net revenues — rose 1.3% from the previous quarter to 12.56%, higher than its 2025 average of 12.36%, which was already a decrease from the 12.45% administrative expense ratio posted in 2024.

The quarterly spike in administrative expenses was driven by an 8% increase in occupancy and technology spending, a 30% increase in professional services costs and a 9% jump in salaries and benefits.

Among those three categories, however, only salaries and benefits spending rose on an annual basis, up 4% over the year despite hefty workforce reductions.

Fannie Mae spent $516 million on salaries and benefits in the fourth quarter, compared to $475 million in the third quarter and $497 million a year ago. By law, “named executives” at Fannie Mae and Freddie Mac “do not receive bonuses or any form of equity compensation.”

According to the 10-K filing, Peter Akwaboah, who replaced Priscilla Almodovar as acting CEO of Fannie Mae in October after serving as chief operating officer since May 2024, earned about $3.7 million in direct compensation in 2025, up from about $2.2 million in 2024.

By law, $600,000 of that was statutorily mandated base salary, and the rest consisted of fixed and at-risk corporate and individual performance-based deferred salary — which maxed out for Akwaboah at $4.25 million. The regulatory filing indicates that his salary benchmark “considers his responsibilities as COO but not his role as Acting CEO.”

Including other compensation, Akwaboah earned more than $5 million in 2025, up 38% from about $3.65 million in 2024. Part of that pay package included the second and final installment of a sign-on bonus for joining the company in 2024. He received the first payment of $1.25 million in 2024, and a second payment of $1.177 million in May 2025.

Salaries and benefits rise amid layoffs

The extent to which senior executives receive a portion of their deferred corporate-performance target is based on the FHFA’s assessment of Fannie Mae’s completion of its annual performance objectives. For 2025, FHFA determined that “at-risk deferred salary for senior executives that is based on corporate performance would be paid at 82% of target.”

Fannie’s board of directors and its Compensation and Human Capital Committee, which is part of that board, assessed that named executives’ individual performance-based salary targets should be paid out at 100% of the 97% that it assessed its named executives as having achieved against the 2025 Board of Directors’ goals.

The Compensation and Human Capital Committee is chaired by Michael Stucky, a home building and building supplies veteran of 30 years. The committee also includes Scott Stowell, a 40-year home building veteran; Clinton Jones, general counsel at FHFA; and Barry Habib, founder and CEO of MBS Highway, a mortgage and bond market forecasting platform.

Among the company’s five named executives, Akwaboah was directly mentioned by the Compensation and Human Capital Committee in the 10-K filing for driving Fannie Mae to achieve its workforce reduction targets, as he “reduced staff and administrative expenses in the Chief Operating Office division, which is expected to result in meaningful savings in the future,” the form said.

Fannie’s chief financial officer, Chryssa Halley, had a secondary mention for her workforce reduction efforts as she “co-led company initiatives to drive cost savings across headcount, contracts, and other efficiency savings opportunities” with Akwaboah.

Halley saw her total compensation rise from $3 million in 2023 and $3.4 million in 2024 to almost $3.9 million in 2025. Direct compensation was flat at $2.8 million for Anthony Moon, chief risk officer at Fannie Mae, but up from $2.7 million in 2023. His total compensation declined from $4.4 million in 2023 to $3.5 million in 2024 and nearly $3 million in 2025.

The two newest members to Fannie Mae’s executive suite, Kelly Follain and Erik Bisso, head of multifamily operations and chief investment officer, respectively, had total compensation of $3.4 million and $3.7 million.

Follain, who joined Fannie in March 2025, received a sign-on bonus of $1.6 million paid in two installments last year. The first payment of $1 million was paid around the time she joined the company, with the second $600,000 payment made in December.

The median Fannie Mae employee income was slightly over $200,000 in 2025, putting the CEO-to-median-employee-pay-ratio at about 14.5 to 1 last year, according to the company. That figure reflects the roughly 7,000 employees that Fannie ended the year with, down from around 8,200 as of December 2024.

Fannie Mae did not respond to a request for comment beyond directing Scotsman Guide back to its Wednesday filings.