Freddie Mac recorded first-quarter earnings that inched up from a year ago as its chief financial officer delivered his take on what regulatory cost-cutting measures could mean for the business.
The government-sponsored enterprise reported that quarterly net income exceeded
Freddie's larger competitor, Fannie Mae, had reported
Chief Financial Officer Jim Whitlinger called the latest quarterly numbers a "solid performance" that could improve as Bill Pulte, the Federal Housing Finance Agency's director and chairman of both Fannie and Freddie's boards, has focused on efficiency measures.
"Many of you are closely following the announcements and orders issued by Director Pulte, and what those mean for Freddie Mac. Director Pulte has helped us streamline our business," he said.
Whitlinger confirmed several initiatives Pulte had delivered information about
"He has eliminated activities not central to Freddie Mac's mission as well as requirements that make it more expensive to finance a loan, which might provide little tangible benefit to the majority of American renters and homebuyers," Whitlinger added. "We support actions he has taken to drive fraud and waste out of the U.S. housing finance system. We expect the savings associated with FHFA's new direction to reduce expenses in 2025 and beyond."
Freddie fulfilled its mission during the quarter by helping 313,000 families buy, rent or refinance a home, with 52% of single family loan purchases supporting first time home buyers and 92% of the eligible rental units financed affordable to middle income renters, Freddie's CFO said.
Single-family loan acquisitions rose on a consecutive-quarter basis to $78 billion from $74 billion. A year ago, Freddie reported acquiring $62 single-family mortgages in the first quarter.
Net revenues in single-family were up 10% from the prior-year quarter, Whitlinger said. This was primarily due to mortgage portfolio growth that fueled an increase in net interest income. The portfolio totaled $3.1 trillion at the end of the quarter, up 2% year-over-year.
Freddie's total number in that category was about roughly 1% below what analysts had generally anticipated, according to S&P Capital IQ.
Somewhat like Fannie's stock had reacted a day earlier, Freddie's shares initially rose in as its earnings report and call proceeded, but then declined. Freddie's stock had been in a trading range between $5.18 and $5.21 at deadline.
Earnings Freddie Mac can retain rather than return to the Treasury to prepare it for an eventual exit from government conservatorship increased the GSE's net worth to $62 billion from $59.58 billion the previous quarter.
While the GSEs have been allowed to retain some earnings, they can't count the Treasury's preferred stock as regulatory capital, and that could be a challenge in efforts to accommodate a release in which it can be compared to private market peers, analysts at BTIG noted.
"We view the regulatory capital requirement as overly punitive relative to the embedded risk in the GSE portfolios, and therefore expect either the capital requirement needs to get lowered, or guarantee fees get raised to support a competitive return," they said in a recent report.
Single-family credit quality remained strong during the quarter, according to Whitlinger, who said the weighted averages were 52% for the current loan-to-value ratio and 754 for the credit score,
"The single family serious delinquency rate remained low at 59 basis points, unchanged from the prior quarter, and up seven basis points from the prior year quarter," Whitlinger said.
He primarily attributed the 12-month increase to a higher serious delinquency rate for loans originated during and after 2022 and lingering impacts from hurricanes that occurred late in 2024.
Mike Hutchins, who has been acting president and CEO since
