Freddie Mac’s Net Income Jurassically Increases; GSE to Pay Nearly $4 Billion to Treasury Team Thayer News
Freddie Mac's net income soared for the second quarter of 2015, totaling $4.2 billion—nearly nine times the GSE's Q1 net income of $524 million, according to an announcement from Freddie Mac on Tuesday.
Also for Q2, Freddie Mac reported $3.9 billion in comprehensive income, a five-fold increase from Q1's total of $746 million. With the inclusion of September 2015's Dividend Obligation of $3.9 billion, Freddie Mac will have returned $96.5 billion to taxpayers, about $25.2 billion more than the $71.3 billion Freddie Mac received in a bailout from Treasury in 2008.
Q2 was the 15th consecutive quarter of profitability for Freddie Mac, which became profitable again in Q4 2011, a little more than three years after the bailout.
"Our very solid financial results show that Freddie Mac, while in conservatorship, is building a strong operating business model that represents taxpayers well and is efficiently serving U.S. homebuyers and renters. We continue to invest in improving the customer experience, and we lead the industry in reducing the taxpayers’ exposure to mortgage credit risk," said Donald H. Layton, CEO of Freddie Mac. "Also, we continue to make progress on our 2015 Conservatorship Scorecard objectives, which support our mission of providing liquidity, stability and affordability to the mortgage market, including responsibly increasing access to affordable housing for America’s families in a safe and sound way."
The single-family purchase volume for Freddie Mac increased from Q1 to Q2 by about $20 billion, up to a total of $101.2 billion. Through Structured Agency Credit Risk (STACR) debt notes and Agency Credit Insurance Structure (ACIS) reinsurance transactions, Freddie Mac transferred a portion of single-family credit risk on $94.2 billion in unpaid principal balance (UPB) in Q2. Since the STACR program began in 2013, Freddie Mac has transferred a portion of credit risk on almost $344 billion in UPB of single-family mortgages, according to Freddie Mac.
The Enterprise has helped 15.2 million homeowners buy, rent, or keep their homes since the start of 2009, just four months after the conservatorship began. About 11.7 million of those were single-family homes funded by Freddie Mac, and 2.3 million of them were multi-family homes. The GSE has also helped 1.1 million homeowners avoid foreclosure in the last six and a half years through either permanent loan modifications, forbearance or repayment plans, or a non-retention solution such as a short sale or deed-in-lieu of foreclosure. Since 2009, Freddie Mac has provided $2.7 trillion in liquidity to the mortgage market.
In the 12-month period ending June 30, 2015, Freddie Mac helped about 109,000 homeowners avoid foreclosure; saved homeowners who refinanced an average of about $2,700 in interest payments in the first year; funded about 1 in 4 home loans nationwide; shifted risk to the private market through 111 innovative transactions; and provided $381 billion in funding to the mortgage market.
Freddie Mac's net income for Q2 of $4.2 billion was more than half of the Enterprise's total net income for all of 2014, which was $7.7 billion. In 2013, Freddie Mac's net income was $48 billion.
Justin Lee Thayer is Lane counties expert in market analysis for real estate investors. Call Justin @ 541-543-7287