Freddie Mac reported
But unlike
"The company continued to deliver steady results despite relatively high mortgage rates and muted housing sales," James Whitlinger, interim chief financial officer, said during the earnings call.
Whitlinger took on this role
The government-sponsored enterprise reported net income of $2.8 billion,
This took place even as net revenues increased compared with those periods, at $6 billion, versus $5.8 billion and $5.3 billion respectively.
But this year, Freddie Mac added $394 million to its credit reserves in both of its business segments, $315 million of that on the single family side due to loan acquisition activities and the impact of higher mortgage rates, Whitlinger said. For the second quarter of 2023, improvements in home prices allowed it to take a release of single-family credit reserves, he added.
The multifamily provision was actually lower compared with the prior year, at $79 million versus $101 million.
Freddie Mac's single-family seriously delinquent loan rate of 0.5% as of June 30 was actually 6 basis lower than it was on the same day last year. During the period, workouts allowed 80,000 families to remain in their homes, Whitlinger said.
Freddie Mac was able to increase its net worth to $53.2 billion on June 30, as it no longer has to send all of its profits to the U.S. Treasury under the original terms of the
But that also increases the liquidation preference that the Treasury holds, which on that date was $121.3 billion.
Net income for the single-family segment was $2.3 billion, compared with $1.9 billion in the first quarter and $2.4 billion in the first quarter of 2023.
New business activity increased year-over-year even as the interest rate environment was unfavorable during the period, he noted. The 30-year fixed rate loan peaked at 7.22% before ending the quarter at 6.86%. That was up from 6.79% at the end of the first quarter and 6.71% one year ago.
Segment revenues increased 70% year-over-year, led by a $340 million boost in net interest income from growth in the single-family portfolio as well as lower expenses from debt and hedge accounting.
Freddie Mac acquired $85 billion in loans during the period, of which $74 billion was for home purchase and $11 billion were refinancings. In the first quarter, loan acquisition volume was $62 billion ($53 billion of that purchases) while one year prior, it was $83 billion, of which $73 billion consisted of purchase mortgages.
The multifamily business had net income of $481 million, down from $821 million in the first quarter and $563 million for the second quarter of 2023.
But the delinquency rate continued to climb, and is now at 38 basis points; last quarter it was at 34 basis points, while a year ago, it was at 21 basis points.
Multifamily acquisitions were $11 billion, up from $9 billion in the first quarter. But in the second quarter of 2023, it acquired $13 billion of these loans.
Whitlinger started the call noting the second quarter was the fifth anniversary of the uniform mortgage-backed security, or UMBS, a platform that is used by Freddie Mac and Fannie Mae.
Although Freddie Mac had been using the platform prior for several years,
Half of GSE issuance through the platform during the second quarter came from Freddie Mac, he said.
Freddie's
