Mortgage investor Fannie Mae posted dour third-quarter earnings showing annual declines in net income and net revenues, though improvement across key metrics from the previous quarter.

Third-quarter net income of $3.86 billion on net revenues of $7.31 billion exceeded the $3.32 billion in net income on $7.24 billion of net revenues recorded in the second quarter, but lagged last last year’s production.

Net revenues totaled $7.34 billion in the third quarter of 2024, 0.46% higher than last quarter’s revenues. Net income totaled $4.04 billion a year ago, nearly 4.5% higher than Fannie’s net income last quarter.

Wall Street consensus estimates predicted net revenue of $8.1 billion for the quarter. Fannie also missed analyst estimates on earnings per share, reporting EPS of $0.00 versus the consensus estimate of $0.68.

Fannie reported providing $109 billion in liquidity to the mortgage market in the third quarter on mortgage acquisitions backing more than 400,000 home purchases, refinances and rental units across its single-family and multifamily business.

Fannie Mae and Freddie Mac are government-sponsored enterprises, regulated by the Federal Housing Finance Agency (FHFA), tasked with channeling liquidity to the U.S. housing market by acquiring and securitizing residential and commercial mortgages for purchase by investors.

‘Greater business focus’

In a press release announcing the earnings, Bill Pulte, FHFA director and chairman of Fannie Mae’s board of directors, said the company is “operating with greater business focus than ever.”

“Fannie Mae’s strong leadership team continues to perform at a high level,” Pulte said, “reliably meeting the housing needs of borrowers and renters across the United States.”

That leadership team has experienced significant turnover since President Donald Trump tapped Pulte to head the FHFA in mid-March and Pulte subsequently named himself chairman of Fannie’s and Freddie’s separate boards of directors, ousting more than a dozen board members in the process.

Peter Akwaboah, the company’s chief operating officer since May 2024, was promoted to acting CEO last week, replacing Priscilla Almodovar, who joined the company as CEO in December 2022.

John Roscoe and Brandon Hamara were named co-presidents of the mortgage giant in a corresponding move.

On Monday, Jake Williamson was named the new head of Fannie’s single-family division, and Tom Klein as acting general counsel in just the latest leadership shake-up.

Meanwhile, the extent to which Fannie and Freddie are “reliably meeting the housing needs of borrowers and renters across the United States” is up for debate.

The pace of home sales in 2025 is tracking last year’s three-decade lows, the result of stark affordability barriers preventing current homeowners from trading homes and first-time homebuyers from entering the market. Existing-home sales improved marginally in September, rising 1.5% monthly and 4.5% year over year to an annualized pace of 4.06 million units.

In the third quarter, homes in roughly 80% of U.S. counties were unaffordable for typical residents by standard housing cost-to-income ratios, according to real estate market analytics firm Attom.

Growing net worth

As the Trump administration weighs options for taking Fannie and Freddie public to release them from federal conservatorship, Fannie reported its net worth rose 3.8% in the third quarter to $105.5 billion, up from $101.6 billion in the second quarter.

The company’s net worth was $13.5 billion as of January 2020 and $60.3 billion as of the fourth quarter of 2022.

On a Wednesday morning earnings call, Fannie Mae’s chief financial officer, Chryssa Halley, said the quarterly results demonstrate the “strength and resilience” of the company’s earnings and underscored how revenue from Fannie Mae’s guaranty book of business continues to support the company’s expense base and operations.

The total guaranty book, which represents the volume of single-family and multifamily mortgages backed by Fannie Mae, remained unchanged at $4.1 trillion on a quarterly basis.

The single-family guaranty book declined by just $9 billion in the third quarter to $3.59 trillion but was $38 billion lower than the third quarter of 2024.

Fannie derives 80% of its net revenues from net interest income (guaranty fees) charged on mortgage acquisitions. Fannie’s net interest income declined 1.25% annually in the third quarter, falling from $7.26 billion a year ago to $7.18 billion last quarter.

Fannie’s net interest margin (NIM) — a measure of profitability calculated as the difference between interest generated largely from guaranty fees assessed on acquisitions and interest expenses paid on liabilities — remained stable in the third quarter, declining slightly to 66 basis points from 66.9 basis points in 2024.

Fannie’s NIM was 62.3 basis points in 2019, peaked at 72.9 basis points in 2021, and has declined annually since.

Halley noted the single-family book is steadily turning over to higher guaranty fees, which have risen annually from 40 basis points in 2015 to 48.3 basis points in the third quarter of 2025.

Single-family acquisitions

Total single-family acquisitions reached $90 billion in the third quarter, Fannie Mae reported, rising on seasonally higher origination trends, compared to the second quarter’s $84 billion and first quarter’s $64 billion.

Single-family acquisitions totaled $93 billion in the third quarter of 2024. Halley noted that new mortgage acquisitions in the third quarter did not exceed existing book runoff.

The $90 billion in third-quarter acquisitions was comprised of $72 billion in purchase mortgages, $9 billion in cash-out refinances and $9 billion in “other refinances.” Meanwhile, signs of the persistent affordability pressures have emerged in Fannie’s third-quarter mortgage acquisitions.

Reaching 38%, the share of overall single-family acquisitions, including purchases and refinances, carrying debt-to-income ratios (DTIs) exceeding 43% continued its steady rise in the third quarter.

Just 23% of mortgages purchased by Fannie in the third quarter of 2021 had DTIs above 43%, which rose to 32% in the third quarter of 2022 and 36% in the in the third quarters of 2023 and 2024.

Halley said the trend is being driven by a “higher mix of purchase volumes” and purchasers tending to enter at or near their affordability limits. She said she expects the trend to continue until mortgage rates ease further, thereby easing monthly payment burdens.

Halley also noted that Fannie does not anticipate a pickup in refinancing unless mortgage rates drop below 5%.

The weighted-average FICO credit score on Fannie’s single-family guaranty book dipped 2 points to 756 from 758 a year ago. Notably, the share of total single-family acquisitions in the third quarter with FICO scores under 680 rose to 7% from 5% a year ago.

Weighted-average original loan-to-value ratios (OLTVs) remained at 77% in the third quarter, in line with levels seen in 2023 and 2024, though higher than the 69% weighted-average OLTVs in 2021. The share of OLTVs exceeding 95% has climbed steadily in recent years, from 3% in 2021 to 7% in 2024 and 2025.