Fannie Mae’s Financial Fortress Faces Mounting Pressure

Fannie Mae's full-year 2025 results, released Wednesday, present a complex picture of robust profitability shadowed by emerging credit strains. The government-sponsored mortgage giant reported a net income of $14.4 billion for the year, reinforcing its continued earnings power while under federal conservatorship. This figure, however, represents a decline from the prior year's performance.

A cornerstone of the enterprise's stability is its substantial equity base, which expanded to $109.0 billion by the end of December 2025. This capital accumulation is a critical strategic priority, as the firm is prohibited from paying dividends and must instead fortify its defenses against potential future losses. Throughout 2025, Fannie Mae provided approximately $409.3 billion in liquidity to the mortgage market, financing homes for an estimated 1.5 million families.

Beneath the surface of these strong headline numbers, management's report signals growing distress within its loan portfolios. Executives highlighted increasing payment delinquencies across both single-family and multifamily housing segments as a key concern.

A specific metric reveals the trend: the serious delinquency rate for multifamily properties reached 0.74 percent as of December 31, 2025. This marks a rise from the 0.68 percent recorded at the end of the previous quarter. The outlook offers little respite, with Fannie Mae's own projections anticipating a further increase in this delinquency rate through 2026.

Should investors sell immediately? Or is it worth buying Fannie Mae?

Beyond credit losses, the company's operational environment is being squeezed by intense competition and narrowing interest margins. In response, leadership is implementing stricter cost controls and enhancing its risk surveillance protocols.

Investor Apathy and Political Stasis

The financial update did little to stir activity in the company's shares, which trade over-the-counter (OTC). The muted market reaction underscores a prevailing investor sentiment focused less on quarterly earnings and more on the unresolved political future of the entity. Fannie Mae has remained under government control since the 2008 financial crisis, with no clear path to release, while persistently high interest rates continue to constrain new business volume.

As the book closes on 2025, the focus for stakeholders shifts decisively toward risk mitigation. Should economic conditions deteriorate in the coming year, Fannie Mae's capacity to effectively manage and contain rising loan defaults will become the paramount determinant of the strength of its balance sheet. The question for 2026 is whether the firm's substantial capital cushion is adequate for the challenges ahead.