Morningstar DBRS Confirms Federal National Mortgage Association's Long-Term Credit Ratings of AAA With Stable Trends

Published: 2026-04-13 04:43:10 ET FNMA

Published on 04/13/2026 at 04:43 am EDT

DBRS, Inc. (Morningstar DBRS) confirmed both the Long-Term Issuer Rating and Long-Term Senior Debt credit rating of Federal National Mortgage Association (Fannie Mae or the Company) at AAA.

The trends on all credit ratings are Stable. The Company's current position under conservatorship and strong implicit support from the U.S. federal government result in Fannie Mae's final credit ratings being equalized with the Long-Term Local Currency - Issuer Rating of the United States of America (the U.S.), as well as the maintaining of the SA1 Support Assessment.

KEY CREDIT RATING CONSIDERATIONS

The Long-Term Issuer Rating of Fannie Mae remains equalized with the sovereign credit rating of the United States of America. Despite the lack of an explicit guarantee from the U.S. government, the credit ratings remain underpinned by the very strong and ongoing systemic support that remains in place. The credit ratings also consider the Company's entrenched market position, scale economies, access to funding commitments from the U.S. Treasury, and conservatorship status under the Federal Housing Finance Agency (FHFA). Fannie Mae is systemically important given its role in supporting the very large U.S. housing finance ecosystem, which would likely experience higher levels of volatility in the absence of this support, resulting in more severe/disruptive systemic shocks across the broader U.S. economy during periods of stress. There are currently no other entities that could readily perform this specific role outside of the two housing government-sponsored enterprises (GSEs). While speculation continues around the potential privatization of the GSEs, Morningstar DBRS does not view any changes to its status as likely for the length of the credit rating outlook period given the complexities and potential consequences of such an action, especially considering current macroeconomic uncertainties.

Fannie Mae's position, not only in the U.S. housing market but the global debt capital markets, is also a consideration in the assessment of the Company's essentiality. The Company's debt is widely held throughout the global financial system, likely incentivizing the U.S. government to help avoid any defaults given the potential significant repercussions. Morningstar DBRS also considered Fannie Mae's high degree of access to financial support given its current funding commitment with the U.S. Treasury (drawable amount of $113.9 billion at YE2025), which we assume to be readily available should the need arise (i.e., if Fannie Mae's GAAP net worth turns negative). The Company also has strong government oversight given its conservatorship status under the FHFA. The FHFA reconstituted the board of directors (the Board) after becoming the Company's Conservator, directing the Board to owe its fiduciary obligations solely to the FHFA (and not to the Company or shareholders).

The Stable trends primarily reflect that of the U.S. sovereign credit rating. Given the level of capital required to meet its regulatory capital standards, the complexities of privatization, and the current U.S. housing market that continues to face substantial headwinds, Morningstar DBRS foresees Fannie Mae remaining in conservatorship for the length of the credit rating outlook period.

CREDIT RATING DRIVERS

Given the current credit ratings of Fannie Mae are at the highest level in our long-term credit rating scale, there is no potential for a credit ratings upgrade. Conversely, the credit ratings would be downgraded should we lower the Long-Term Local Currency - Issuer Rating of the U.S. Morningstar DBRS would also downgrade the credit ratings should we view the support from the U.S. Treasury to have been diminished, or the expectation of support to be less timely.

CREDIT RATING RATIONALE

Franchise Building Block Assessment

Fannie Mae was chartered by Congress in 1938 and has a unique franchise given its status as a GSE and the implicit backing from the U.S. government. Fannie Mae's business model revolves around guaranteeing payments on the mortgage loans it acquires/securitizes, and its mortgage-backed securities are highly sought after in the global capital markets. As of September 30, 2025, the Company owned/guaranteed approximately 25% of all U.S. single-family and an estimated 21% of U.S. multifamily mortgage debt outstanding, reflecting a significant share of the market and the scale of its operations. Nevertheless, Fannie Mae must obtain FHFA approval prior to any new product offerings, resulting in limitations on its current and future business activities.

As the Company's business activities are closely tied to the cyclical U.S. housing market, various macroeconomic factors can significantly affect its financial results (interest rates, home prices, housing activity, gross domestic product, etc.). In October 2025, the Company announced several leadership changes following Priscilla Almodovar's (previously Fannie Mae's chief executive officer (CEO)) departure, with Peter Akwaboah (previously chief operating officer (COO)) named to the dual role of acting CEO and COO, and John Roscoe and Brandon Hamara named as co-presidents. Fannie Mae operates across two business segments (single family and multifamily), with single family accounting for most of its net revenues (83% in 2025).

Earnings Building Block Assessment

Fannie Mae has substantial earnings power given the size of its operations. Nonetheless, given its business model revolves around securitization as opposed to direct lending/loan origination, borrower relationships are more transactional, though services are provided under a highly visible brand. The Company can also be subject to a high level of earnings volatility given its ties to the cyclical U.S. housing market. Improving operating efficiency remains a top priority for Fannie Mae, and the Company has continued its optimization efforts by reducing its workforce, scaling back contractors, and renegotiating key contracts over the past year.

In 2025, Fannie Mae reported net income of $14.4 billion (down 15% year over year (YOY)), driven primarily by a provision for credit losses and lower fair value gains YOY. Overall, net revenues were relatively flat YOY, driven by an increase in net interest income (NII) from its guaranty book of business that was offset by lower NII from portfolios. The Company also reported a provision for credit losses of $1.6 billion (compared with a credit benefit the prior year) and non-interest expense of $9.6 billion (down 1% YOY), driven primarily by a decrease in other expenses and a reduction in administrative expenses as the Company starts to realize the benefits of its cost-reduction efforts.

Risk Building Block Assessment

Fannie Mae is exposed to both national and regional housing downturns given its significant share of the U.S. housing market. Nonetheless, the Company's single-family book is geographically diversified, and credit quality remains strong with a serious delinquency rate (SDQ) of 58 basis points (bps) at YE2025. New single-family acquisitions totaled $335 billion in 2025, with acquisition credit metrics that have remained consistent YOY. The Company's multifamily SDQ increased YOY to 74 bps at YE2025, compared with 57 bps at YE2024, primarily driven by sustained market challenges in recent periods, which Fannie Mae believes could further increase in 2026.

The Company manages credit risk by transferring a portion of its single-family credit risk to third parties through mortgage insurance and credit risk transfer transactions while using credit enhancements (both front-end and back-end) across its multifamily credit exposures. As a result, nearly all of the Company's multifamily book had some form of credit protection as of YE2025. Fannie Mae has sound operational risk oversight and has maintained a good track record of identifying and managing these risks given its comprehensive and well-designed risk management framework for setting its risk appetite and monitoring ongoing conditions.

Funding and Liquidity Building Block Assessment

Fannie Mae sells its debt securities in both the domestic and international capital markets, offering debt structures to meet the needs of virtually every type of investor segment globally. As a result, the Company has a broad and deep funding base composed of a wide array of different types of securities. With 97% of total debt composed of securitization-related debt, the majority of the Company's balance sheet is encumbered. Nonetheless, as the Company's agency MBS amortizes with the underlying pools of mortgages, most of its funding base is well-aligned with its assets. The remaining funding is issued as unsecured corporate debt, the majority of which is fixed rate, with maturities that are laddered appropriately.

At YE2025, the Company had $24.5 billion of short-term corporate debt and $93.8 billion in its corporate liquidity portfolio (consisting of $11.4 billion in cash, $55.2 billion in U.S. Treasury securities, and $27.2 billion in securities purchased under agreements to resell). Nonetheless, Fannie Mae is unlikely to meet its sizable liquidity requirements during a severely stressed operating environment without the support of the U.S. Treasury given the scale of its operations.

Capitalization Building Block Assessment

Although Fannie Mae's close ties to the U.S. housing market results in significant earnings volatility, the Company has nonetheless been able to build upon its net worth over the past several years. Fannie Mae is subject to the enterprise regulatory capital framework (ERCF), though capital requirements under this framework have been waived during conservatorship. Nevertheless, its current capital levels remain substantially below regulatory requirements.

While Fannie Mae had a positive GAAP net worth of $109 billion at YE2025, the ERCF excludes the stated value of the senior preferred stock ($120.8 billion), as well as a portion of deferred tax assets, resulting in the Company being significantly undercapitalized. Indeed, at YE2025, the shortfall to adjusted capital requirements totaled $215 billion. As a result, the Company reported negative regulatory capital ratios given deficits across each tier of capital. Given covenants under the senior preferred stock purchase agreement with the U.S. Treasury, Fannie Mae also does not have access to equity funding except through draws from the U.S. Treasury.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE CONSIDERATIONS

Credit rating actions on the United States of America are likely to have an impact on this credit rating. ESG factors that have a significant or relevant effect on the credit analysis of United States of America are discussed separately at https://dbrs.morningstar.com/issuers/12866. However, there were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how Morningstar DBRS considers ESG factors within the Morningstar DBRS analytical framework can be found in the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) at https://dbrs.morningstar.com/research/454196.

Notes:

All figures are in U.S. dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Non-Bank Financial Institutions (September 5, 2025) https://dbrs.morningstar.com/research/462007. In addition, Morningstar DBRS uses the Morningstar DBRS Criteria: Approach to Environmental, Social, and Governance Factors in Credit Ratings (May 16, 2025) https://dbrs.morningstar.com/research/454196 in its consideration of ESG factors.

The following methodologies have also been applied:

Global Methodology for Rating Government-Related Entities (February 13, 2026)

https://dbrs.morningstar.com/research/474099

The credit rating methodologies used in the analysis of this transaction can be found at: https://dbrs.morningstar.com/about/methodologies.

The primary sources of information used for these credit ratings include Morningstar, Inc., U.S. Federal Reserve, Federal Housing Finance Agency, and company documents. Morningstar DBRS considers the information available to it for the purpose of providing this credit rating was of satisfactory quality.

The credit ratings were not initiated at the request of the rated entity.

The rated entity or its related entities did not participate in the credit rating process for this credit rating action.

Morningstar DBRS did not have access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this credit rating action.

These are unsolicited credit ratings.

For more information on Morningstar DBRS' policy regarding the solicitation status of credit ratings, please refer to the Credit Ratings Global Policy, which can be found in the Morningstar DBRS Understanding Ratings section of the website: https://dbrs.morningstar.com/understanding-ratings.

These credit ratings are endorsed by DBRS Ratings Limited for use in the United Kingdom, and by DBRS Ratings GmbH for use in the European Union, respectively. The following additional regulatory disclosures apply to endorsed ratings:

The last credit rating action on this issuer took place on April 16, 2025.

With respect to FCA and ESMA regulations in the United Kingdom and European Union, respectively, these are unsolicited credit rating. The credit ratings were not initiated at the request of the issuer.

With Rated Entity or Related Third-Party Participation: No

With Access to Internal Documents: No

With Access to Management: No

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. Morningstar DBRS' trends and credit ratings are monitored.

For further information on Morningstar DBRS historical default rates published by the European Securities and Markets Authority (ESMA) in a central repository, see: https://registers.esma.europa.eu/cerep-publication. For further information on Morningstar DBRS historical default rates published by the Financial Conduct Authority (FCA) in a central repository, see https://data.fca.org.uk/#/ceres/craStats.

Lead Analyst: Eric Chan, Vice President

Rating Committee Chair: David Laterza, Associate Managing Director

Initial Rating Date: April 18, 2024

For more information on this credit or on this industry, visit https://dbrs.morningstar.com.

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