Freddie Mac reported $524 million in net income for the first quarter, and judging from the $227 million in net income it reported in the fourth quarter of 2014 and the fact that this was the company’s 14th consecutive quarter in the black, it’s faring much better than its government-sponsored enterprise (GSE) counterpart, Fannie Mae.
As we reported last week, Fannie Mae reported $1.9 billion in net income in the first quarter, down 64 percent from the $5.3 billion reported in the same quarter last year and falling short of analysts’ estimates of $2.6 billion. Fannie Mae attributed the sharp drop to a sizable derivative loss and a drop in credit-related income.
But Freddie Mac has more to celebrate, as it also reported comprehensive income of $746 million in the first quarter, compared with $251 million in the fourth quarter of 2014.
“Our strong business momentum from last year carried into the first quarter, enabling us to again produce earnings despite a continued declining rate environment, so we can return further dividends to taxpayers,” said the company’s CEO, Donald H. Layton.
Freddie Mac will pay $746 million to the Treasury Department in June. To date, the company has repaid taxpayers $92.6 billion, exceeding the $71.3 billion bailout it received from the federal government after being placed into conservatorship in 2008 following the financial crisis.
“We continue to focus on serving our growing customer base better to support the U.S. economy, innovating to become a more competitive company, and reducing risk to the taxpayer,” Layton added. “We are also working under FHFA leadership to make the industry stronger, with a growing focus on responsibly increasing access to affordable housing for the nation’s borrowers and renters.”
Freddie Mac also reported $3.6 billion in net interest income and $2.4 billion in derivative losses, of which $1.8 billion was related to fair value changes.
Delinquency rates are declining and remain below industry benchmarks, said Freddie Mac. The single-family serious delinquency rate was 1.73 percent, compared with 2.2 percent in the first quarter of last year.
The multifamily delinquency rate was 0.03 percent. Multifamily new business volume remained robust at $10 billion in the first quarter, likely due to the transfer of credit risk on these mortgages to the private market through Freddie Mac’s K-deal offerings.
Freddie Mac also said it provided $2.6 trillion in liquidity to the mortgage market; funded approximately 11.3 million single-family homes and 2.2 million multifamily rental units; and provided foreclosure alternatives to 1.1 million borrowers.