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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 72 J O U R N A L June 2023 sovereign and downgraded. Fitch believes this risk is well outside of the current rating horizon, and meaningful GSE reform is not likely for the foreseeable future. The GSEs could be removed from RWN if the U.S. sovereign rating is removed from RWN. Both Fannie Mae and Freddie Mac recently issued their earnings report for Q1 of 2023, with both GSEs showing quarter- over-quarter gains amid a volatile housing marketplace. Fannie Mae reported $3.8 billion in net income for Q1 of 2023, with net worth reaching $64 billion as of March 31, 2023. Fannie Mae reported its net income increased $2.3 billion in Q1 compared to Q4 of 2022, driven by a $3.2 billion decrease in provision for credit losses. "We delivered strong first quarter results in a volatile market and remain committed to being a source of stability for the housing finance system throughout all economic cycles," said Priscilla Almodovar, CEO of Fannie Mae. "We are able to do so because of the changes we've made to improve the resilience of our business, our focus on risk management, and strong liquidity. This allows us to continue to facilitate affordable, equitable, and sustainable access to homeownership and rental housing." Freddie Mac reported a net income of $2 billion in Q1 of 2023, yet a 47% year-over-year drop in the quarter, primarily driven by lower net revenues and a credit reserve build in the current period. Net revenues were $4.8 billion, down 17% year-over-year, as higher net interest income was offset by a decline in non-interest income. Net interest income was $4.5 billion, up 10% year-over-year, primarily driven by mortgage portfolio growth, higher average portfolio guarantee fee rates, and higher investments net interest income due to higher interest rates. These increases were partially offset by a decline in deferred fee income due to slower prepayments as a result of higher mortgage interest rates. Non- interest income was $0.3 billion, down 81% year-over-year, primarily driven by a decline in net investment gains in Single-Family from elevated levels in the prior year period. "We had a solid quarter, earning $2 billion with no significant impact to our earnings or balance sheet from the recent banking industry disruption," said Michael DeVito, Freddie Mac CEO during the GSEs' earnings call. "Our earnings enabled us to transfer more than $250 million to Housing and Urban Development's Housing Trust Fund and Treasury's Capital Magnet Fund, to benefit lower-income borrowers and renters. Solid earnings also increased our net worth by more than $2 billion to $39.1 billion. Our performance during the quarter was partly the result of steps we've taken these past 15 years to focus on the safety and soundness of our enterprise, particularly with respect to credit risk. That's enabled us to serve our mission and be a stabilizing force during the recent banking crisis and the pandemic before that. It's also enabled us to be there for families when natural disasters struck across the country." PAVE TASK FORCE TAKES NEW ACTIONS TO ADDRESS APPRAISAL BIAS T he Interagency Task Force on Property Appraisal and Valuation Equity (PAVE), co-chaired by U.S. Department of Housing and Urban Develop- ment (HUD) Secretary Marcia L. Fudge and White House Domestic Policy Advisor Neera Tanden, have announced a set of actions to deliver on the PAVE Action Plan, and ensure that every American who buys a home has the same opportunities to build generational wealth through homeownership. The actions by the Biden Administration are announced two years since the President announced the formation of PAVE–on the centennial of the Tulsa Race Massacre. "Owning a home provides a path to the American dream. Yet, that dream has been deferred for Black and Brown people, as we have consistently had our homes under- valued," said HUD Secretary Fudge. "Having your home undervalued is bigger than just a number on a page. It can be the difference between getting a loan and not–between having enough money for retirement or not. Through the President's PAVE Task Force, the Biden-Harris Administration is taking bold action to address appraisal bias–and renewing our commitment to doing everything in our power to root it out, once and for all." Actions by the Biden Administration include: » Preventing algorithmic bias in home val- uation: Six agencies are issuing a proposed rule regarding automated valuation mod- els (AVMs). The proposed rule, subject to a 60-day public comment period, would establish quality control standards to help ensure that AVMs are accurately and fairly assessing home values. Under the propos- al, the agencies would require institutions that engage in covered transactions to adopt policies, practices, procedures, and control systems to ensure that AVMs ad- here to quality control standards designed "Our earnings enabled us to transfer more than $250 million to Housing and Urban Development's Housing Trust Fund and Treasury's Capital Magnet Fund, to benefit lower-income borrowers and renters." — Michael DeVito, CEO, Freddie Mac