Freddie Mac, like larger counterpart Fannie Mae, reported another profitable quarter that could fuel more interest in a potential new public offering for some of their shares.
The government-sponsored enterprise earned $2.8 billion in net income during the quarter, compared to $2.39 billion
"This decrease is primarily driven by $175 million provision for credit losses this quarter, primarily attributable to new single-family acquisitions, versus a benefit for credit loss in the prior year quarter,"
Shifts in the outlook for home prices and interest rates drive changes in credit loss provisions.
Net worth rose to nearly $68 billion during the third quarter from $64.81 billion in the second and $56.39 billion a year earlier. The capital measure has been one of the key focal points as officials explore the potential for
At $5.7 billion, net revenues weren't quite as high as the previous quarter's $5.9 billion or the year-ago period's $5.8 billion. Whitlinger attributed the change to lower noninterest income. A rise in net interest income did offset this to some degree, but not enough to boost net revenues.
Mortgage portfolio and new acquisition metrics
"The total mortgage portfolio increased to $3.62 trillion as we facilitated the flow of more than $124 billion of liquidity to US housing," Whitlinger said. "That was up from $106 billion in the prior quarter."
The $18 billion in additional liquidity helped 483,000 American households buy, refinance or rent a home, according to Freddie Mac's press release.
"Most of the houses and apartments we financed were affordable to middle-class families, including 92% of the eligible rental units and 54% of the single family homes," Whitlinger said. "Among the homebuyers purchasing a primary residence, 50% were buying a home for the first time."
Freddie generated $99 billion in new business activity during the quarter, up $5 billion from the previous fiscal period and $1 billion from a year earlier, with home purchase activity largely driving the gain.
"First-time homebuyers represented half of our new single-family home purchase loans secured by primary residences. Refinance activity continues to be limited as mortgage rates remained elevated despite a slight decline during the quarter," Whitlinger said.
Credit quality and loan performance measures
Freddie called the credit quality of its mortgage portfolio "strong," with weighted averages for credit scores at 756 and original loan-to-value ratios for new acquisitions at 77%.
"Serious delinquencies increased slightly to 57 basis points at the end of the third quarter, up from 55 basis points at the end of the second quarter and from 54 basis points at the end of the third quarter of last year," Whitlinger said.
The increase stemmed primarily from loans originated after 2022, he said, noting that Freddie Mac engaged in home retention efforts to help affected borrowers.
"We completed about $6 billion worth of loan workouts, helping approximately 22,000 families remain in their homes," he said.
