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Freddie Mac Earnings Up 37% In 1Q 2022

David Krechevsky
Apr 28, 2022
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New business activity, however, was down 43% YOY as refinance activity moderated.

KEY TAKEAWAYS
  • Freddie Mac reported net income of $3.8 billion for the quarter, up 38% from the fourth quarter and up 37% from $2.8 billion in the first quarter of last year. 
  • Overall, Fannie Mae financed 691,000 mortgages in the quarter, with 52% of eligible loans being affordable to low- to moderate-income families, and enabled 111,000 first-time homebuyers to buy a home.
  • Refinances made up 60% of loans vs. 40% purchase loans.

Freddie Mac, the McLean, Va.-based government-sponsored enterprise, today said net income increased 37% in the first quarter of 2022 from a year earlier, driven by higher net revenues and a credit reserve release in its Single-Family unit.

Freddie Mac reported net income of $3.8 billion for the quarter, up 38% from the fourth quarter and up 37% from $2.8 billion in the first quarter of last year. 

Net revenues increased 11% year-over-year to $5.8 billion, primarily driven by higher net interest income and an increase in net investment gains, Fannie Mae said. Net interest income increased 13% year-over-year to $4.1 billion, primarily driven by continued mortgage portfolio growth and higher average portfolio guarantee fee rates in Single-Family. 

Net investment gains increased 25% year-over year to $1.5 billion, as higher gains in Single-Family offset a decline in Multifamily.

Benefit for credit losses increased $0.6 billion year-over-year to $0.8 billion, driven by a credit reserve release due to observed house price appreciation and higher forecasted house prices, Fannie Mae said.

Overall, Freddie Mac financed 691,000 mortgages in the quarter, with 52% of eligible loans being affordable to low- to moderate-income families, and enabled 111,000 first-time homebuyers to buy a home. It also financed 144,000 rental units, with 95% of eligible units being affordable to low- to moderate-income families, the GSE said.

The serious delinquency rate in the quarter was 0.92%, down from 1.12% as of December 31, 2021, and down from 2.34% as of March 31, 2021, driven by the decline of loans in forbearance, Freddie Mac said, adding it completed 49,000 loan workouts.

“Freddie Mac delivered a strong first-quarter performance, with net income exceeding both the first and fourth quarters of 2021,” CEO Michael J. DeVito said. “Single-Family serious delinquencies have declined to their lowest point in two years, and Multifamily delinquencies are at near pre-pandemic levels as well. We remain intensely focused on our expansive mission, with an emphasis on promoting greater equity and sustainability.” 

Some other key financial highlights of the first quarter:

  • New business activity totaled $207 billion, down 43% year-over-year, as refinance activity moderated.
  • Mortgage portfolio increased 17% year-over-year to $2.9 trillion, driven by continued house price appreciation and strong home purchase activity.
  • For Single-Family loans, 53% were refinances, while 47% were purchases.
  • The company provided funding for approximately 691,000 single-family homes, more than 412,000 of which were refinance loans. First-time homebuyers represented 48% of new single-family home purchase loans.

Since September 2008, Freddie Mac has been operating under conservatorship with FHFA as conservator. The support provided by the Treasury Department under the Purchase Agreement enables the company to maintain access to the debt markets and have adequate liquidity to conduct its normal business operations, Freddie Mac said. The amount of funding available to Freddie Mac under the Purchase Agreement was $140.2 billion at March 31, 2022, it said.

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