Driven by a write down of certain assets due to the passage of tax reform in December, Fannie Mae reported a $6.5 billion fourth quarter loss while Freddie Mac reported a $3.3 billion loss. These loses necessitated draws from the Treasury of $3.7 billion for Fannie Mae and $0.3 billion for Freddie Mac. Without the onetime impact of the write down, Fannie Mae posted a quarterly profit of $5.0 billion and Freddie Mac’s was $2.1 billion. The anticipated draws were prompted by the reduction of the corporate tax rate from 35 percent to 21 percent, which triggered a write-down of 40 percent on the tax-deferred assets that the GSEs hold on their balance sheets.
Moving forward, NMHC/NAA will continue to work with legislators to eliminate concerns around operational risk and to minimize unjustified reactions to the Treasury draw as well as on the broader debate of housing finance reform. The apartment industry continues to call for reform that preserves mortgage liquidity currently provided by the GSEs in all markets during all economic cycles.
More information on GSE reform can be found here.