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The Federal Home Loan Mortgage Corp., or Freddie Mac, today reported that its net income declined 33% in the second quarter from a year earlier, driven primarily by a provision for credit losses compared to a benefit for credit losses in the prior quarter.
Freddie Mac reported net income of $2.5 billion for the second quarter, down 33% from $3.7 billion in the second quarter last year and down 35% from $3.8 billion in the first quarter of this year.
Net revenues totaled $5.4 billion, down 7.9% from $5.87 billion a year earlier and down 7.6% from $5.85 billion in the first quarter of this year, primarily driven by a decline in non-interest income in its Multifamily segment.
Net interest income was $4.8 billion, down less than 1% year over year, as continued mortgage portfolio growth and higher average portfolio guarantee fee rates were offset by lower deferred fee income, which was driven by slower prepayments as a result of higher mortgage interest rates, Freddie Mac said.
Non-interest income decreased 41% year-over year to $6 million, primarily driven by lower guarantee income and a decrease in net investment gains in Multifamily.
Overall, the government-sponsored enterprise financed 468,000 mortgages in the quarter, including 263,000 purchase loans, with 61% of eligible loans being affordable to low- to moderate-income families. Of the mortgages, 113,000 were first-time homebuyers.
Freddie Mac also financed 149,000 rental units, with 97% of eligible units being affordable to low- to moderate-income families.
In the Single-Family segment, new business activity totaled $138 billion, down 52% year-over-year, as refinance activity slowed significantly due to rising mortgage interest rates, it said. For the Multifamily segment, new business activity totaled $15 billion, up 15% year-over-year.
Freddie Mac’s Single-Family mortgage portfolio was $2.9 trillion in the quarter, up 14% year-over-year, driven by an increase in average portfolio loan size and a higher share of the overall market, the enterprise said. Its Multifamily mortgage portfolio was $415 billion, up 4% year-over-year, driven by ongoing loan purchase and securitization activity, it said.
Freddie Mac CEO Michael J. DeVito called the enterprise’s second-quarter results “solid,” and said it has built enough equity to withstand “potential economic stress.”
“We helped 617,000 families buy, refinance, or rent a home, and introduced innovations which allow lenders to simplify the loan underwriting process and improve risk management,” he said. “As rising mortgage rates, house-price appreciation, and other economic factors challenge affordability, we are committed to working across the industry to promote equity and sustainable housing nationwide.”
Other highlights include:
- The serious delinquency rate was 0.76%, down from 0.92% as of March 31, 2022, and 1.86% as of June 30, 2021, driven by the decline of loans in forbearance.
- Completed approximately 37,000 loan workouts.
- Delinquency rate of 0.07%, down from 0.08% as of March 31, 2022, and 0.15% as of June 30, 2021.
- 96% of mortgage portfolio covered by credit enhancements