The Enterprise released on Friday its fourth-quarter earnings, posting a net income of $1.3 billion. That compares to a profit of about $6.5 billion in the same quarter a year ago.
For all of 2014, Fannie Mae reported profits totaling $14.2 billion, down from $84 billion in 2013. Like its fellow GSE, Freddie Mac, Fannie Mae's 2013 results got a major boost from a one-time benefit related to deferred tax assets and a surge in funds from securities settlements. Also like Freddie Mac, Fannie Mae's fourth-quarter results reflect losses on risk management derivatives stemming from a decline in interest rates.
Based on its net worth—about $3.7 billion—Fannie Mae said it will pay $1.9 billion in dividends to Treasury, per the terms of the GSEs' amended bailout agreement. As of March, the company will have paid a total of $136.4 billion to taxpayers on the $116.1 billion it drew as a result of the financial meltdown. Dividend payments don't reduce from the prior total—meaning Fannie Mae will continue paying each quarter for the time being.
"Today’s announcement by Fannie Mae CEO Tim Mayopoulos that Fannie’s fourth quarter earnings fell by 66 percent and that it may need to later take a capital draw from the U.S. Treasury should serve as a wake-up call to Congress to move quickly to advance housing finance reform," said Tom Woods, chairman of the National Association of Home Builders. "A promising start was made in the last Congress when a bipartisan group of senators advanced legislation out of the Senate Banking Committee that would maintain an appropriate level of government backing to preserve financial stability and promote investor confidence. Lawmakers need to build on those efforts. The time to act is now while Fannie Mae and Freddie Mac remain in relatively good financial health, and not to kick the can down the road and wait until a possible crisis develops."
Even as income slowed down in the fourth quarter, Fannie Mae said it expects to continue pulling in a profit on an annual basis for the foreseeable future. At the same time, the company warned that earnings in future years are likely to be "substantially lower" than 2014 as settlements stop rolling in and the company continues to shrink its presence in the marketplace.
Moderating home prices are also expected to add some volatility from quarter to quarter, Fannie Mae said.