Earnings at Fannie Mae in 2022 sank to $12.9 billion as the housing market deteriorated, down dramatically from $22.1 billion in 2021, the government sponsored enterprise reported Tuesday.

Last year’s $9.3 billion decrease in net income was primary driven by an $11.4 billion decline in home prices and a $1.6 billion shift to investment losses, which was partially offset by a $1.1 billion increase in fair value gains, the GSE said.

In the fourth quarter, Fannie Mae recorded $1.4 billion in net income, down from $2.4 billion in the third quarter and $5.2 billion a year earlier. In a slowing housing market, Fannie Mae also boosted its provision for losses for the third consecutive quarter.

“Our 2022 results reflect a housing market in transition. We’re proud that Fannie Mae helped approximately 2.6 million households buy, refinance, or rent a home last year, while generating solid earnings and continuing to build our net worth,” CEO Priscilla Almovodar said in a statement.

Almovodar, who took over late last year following a wave of departures in Fannie’s C-Suite, added that the GSE expects that “there will be economic headwinds in 2023 and that housing affordability will continue to remain a challenge for many homebuyers and renters.”

The GSE said its net worth reached $60.3 billion in 2022, up from $47.4 billion just a year prior. Despite the gain, it remains “significantly undercapitalized,” with a shortfall of $258 billion.

Fannie Mae’s single-family MBS issuances were $628 billion in 2022, down from $1.39 trillion in 2021 and $1.34 trillion in 2020, which Fannie staffers attributed to lower refinance activity due to higher mortgage rates. In a bright spot, serious delinquency rates remain low. On the single-family side, they accounted for just 0.65% in the fourth quarter, Fannie Mae’s 10K filing shows.

The GSE is forecasting total single-family originations to decrease by 29% in 2023, dropping from an estimated $2.36 trillion in 2022 to $1.69 trillion in 2023. Its economists project refi origination volume to be just $367 billion in 2023, down from $704 billion last year. It expects a “modest recession” to occur in the first half of the year, resulting in higher unemployment.

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