Fannie Mae

Good day and welcome to the Fannie Mae third quarter 2023 financial results conference call. At this time, I will now turn it over to your host, Pete Backell, Fannie Mae's Director of External Communications.

Hello, and thank you all for joining today's conference call to discuss Fannie Mae's third quarter 2023 financial results. Please note this call includes forward-looking statements, including statements about Fannie Mae's expectations related to economic and housing market conditions, the future performance of the company's book of business, and the company's business plans and their impact. Future events may turn out to be very different from these statements. The forward-looking statements section in the company's third quarter 2023 Form 10-Q filed today, and the risk factors and forward-looking statements sections in the company's 2022 Form 10-K, filed on February 14, 2023, describe factors that may lead to different results. A recording of this call may be posted on the company's website. We ask that you do not record this call for public broadcast and that you do not publish any full transcript. I'd now like to turn the call over to Fannie Mae Chief Executive Officer Priscilla Almodovar and Fannie Mae Chief Financial Officer Krissa C. Halley.

Welcome and thank you for joining us today. I'll touch briefly on the macro environment before reviewing our quarter's financial and mission performance. After that, our Chief Financial Officer Krissa Halley will discuss our quarterly results and economic outlook in more detail. Economic data throughout the year has been stronger than expected, including in the third quarter with GDP going at a 4.9% annualized pace. While wage growth moderated, job growth remained robust. Inflation remains nearly two percentage points higher than the Federal Reserve's target rate. And the 10-year Treasury ended the quarter at 4.6% and continued to rise. That is why in housing, this year continues to remain a tale of two markets. It's a good market for homeowners who locked in low mortgage rates and have more equity in their homes due to rising home prices. Yet for homebuyers, especially consumers looking to buy their first home or those of modest means, it's a tough market, one that is burdened by high home prices, limited inventory, and high mortgage rates. In fact, for the third straight month, median existing home prices were up from a year ago, and the 30-year fixed rate mortgage rate was most recently as high as 7.8%. Because of these factors, in September, existing home sales fell, mortgage origination activity continued to be slow, and consumer sentiment to buy a home was the lowest it has been in the history of Fannie Mae's Home Purchase Sentiment Index. In the case of multifamily, higher interest rates and general market uncertainty have contributed to a decline in overall market activity and declining property values. And while the pace of growth has slowed year over year, rents are still at all-time highs. This is yet another example of the affordability challenges that consumers face. Despite this challenging macroeconomic backdrop, we remain committed to working with lenders to support renters and homeowners while effectively managing risk to our business. Turning to the quarter, we reported $4.7 billion in net income. Contributing to our net income was a credit reserve release reflecting higher actual and forecasted single-family home prices. As a result, we continued to build our net worth through retained earnings, which increased to just under $74 billion as of the end of September. This increase further bolstered our financial stability and enabled us to continue being a reliable source of mortgage credit. In fact, this quarter, we provided $106 billion in market liquidity. This helped 428,000 households buy, refinance, or rent a home. This included 159,000 multifamily rental units, a significant majority of which were affordable to households earning at or below 120% of area median income. We also helped over 106,000 first-time homebuyers to purchase a home. Providing liquidity is only one way Fannie Mae serves the market and works to make it better for everyone. Let me share a few examples. First, We provided educational resources to help renters and homebuyers address challenges they might face on their housing journey. This quarter, for example, we launched a Spanish language credit course, Strategies for Healthy Credit on HomeView, our free online education tool. We also recently refreshed our Flood Awareness Survey that measures consumers' awareness and attitudes towards flood risk and insurance. and we redesign our flood-related content on FannieMae.com. Second, we continue to work with our partners to increase the creation and preservation of affordable rental housing, like we do with our multifamily sponsor-initiated affordability program, which incentivizes multifamily property owners to voluntarily establish income limits and set aside at least 20% of units as affordable to renters earning up to 80% of area median income for the life of the loan. Earlier this month, we built upon this program by launching our multifamily sponsored dedicated workforce housing initiative, which is aimed at conventional workforce housing providers. This program provides a pricing incentive to owners willing for the life of the loan to keep rents on at least 20% of units at level affordable to renters earning up to 80% of area median income and up to 120% in certain high-cost areas. And a final example of how we aim to help make the market serve everyone is the work we continue to do to identify new ways to attract capital to underserved markets, like what we are doing in single-family, where we provide mortgage-backed security disclosures that give investors insights into our mission activities. This information allows MBS investors to allocate their capital towards populations who have traditionally faced barriers to housing access. While today's economic and geopolitical environment are uncertain, Fannie Mae's priorities are clear. We're focused on being a reliable source of liquidity and stability to the U.S. housing finance system. We are focused on making the housing market work better for everyone by advancing equitable and sustainable housing opportunities. And we are focused on strong risk management and ensuring we are financially secure so that we can deliver on our mission. I want to thank our dedicated teams for effectively managing risks while working with our partners across the housing ecosystem to support U.S. renters and homeowners. Now I'll turn it over to Krissa to discuss our third quarter financial results.