OTCMKTS:FMCC Freddie Mac Q3 2024 Earnings Report $8.01 +0.02 (+0.25%) As of 06/17/2025 03:59 PM Eastern ProfileEarnings HistoryForecast Freddie Mac EPS ResultsActual EPS-$0.02Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AFreddie Mac Revenue ResultsActual Revenue$5.84 billionExpected Revenue$5.40 billionBeat/MissBeat by +$438.00 millionYoY Revenue GrowthN/AFreddie Mac Announcement DetailsQuarterQ3 2024Date10/30/2024TimeN/AConference Call DateWednesday, October 30, 2024Conference Call Time9:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Freddie Mac Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 30, 2024 ShareLink copied to clipboard.Key Takeaways Freddie Mac reported a Q3 net income of $3.1 billion and increased its net worth to $56 billion, driven by a 5% rise in net interest income and a 3% increase in net revenues year-over-year. The company supported 415,000 families in purchasing, refinancing or renting homes, with 51% of primary home purchases by first-time buyers and more than half of loans affordable to low- and moderate-income households, while 94% of refinanced multifamily units remained affordable. A release of $191 million in credit reserves—due to lower mortgage rates in single-family and improved loss estimation in multifamily—along with a $393 million reduction in non-interest expense, boosted earnings compared to last year. The single-family segment posted $2.6 billion in net income (up 11%), grew its mortgage portfolio 2% to $3.1 trillion, and maintained strong credit quality with a 52% average loan-to-value ratio, a 755 average credit score, and a 54 bps serious delinquency rate below pre-COVID levels. Multifamily net income rose 47% to $532 million, with a portfolio up 5% to $452 billion, $15 billion in new business, and 68% of newly financed rental units affordable to families earning ≤80% of area median income, despite a modest uptick to a 39 bps delinquency rate. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallFreddie Mac Q3 202400:00 / 00:00Speed:1x1.25x1.5x2xThere are 2 speakers on the call. Operator00:00:00Good morning and thank you for joining us for a presentation of Freddie Mac's 3rd Quarter 2024 Financial Results. I'm Jeff Markowitz, Deputy CAO and SVP of External Affairs and Corporate Communications. We are joined today by our Interim Chief Financial Officer, Jim Whitlinger. Before we begin, we'd like to point out that during the call, Mr. Whitlinger may make forward looking statements based on assumptions about the company's key business drivers and other factors. Operator00:00:23Changes in these factors could cause the company's actual results to materially vary from its expectations. A description of those factors can be found in the company's quarterly report on Form 10 Q filed today. You'll find a 10 Q, earnings press release and related materials posted on the Investor Relations section of freddiemac.com. This call is recorded and a replay will soon be available on freddiemac.com. We ask that the call not be rebroadcast or transcribed. Operator00:00:49With that, I'll turn the call over to Freddie Mac's Interim CFO, Speaker 100:00:53Jim Whitlinger. Good morning and thank you for joining our call to review Freddie Mac's 3rd quarter performance. The company delivered another solid quarter. We earned $3,100,000,000 in the 3rd quarter and our net worth increased to $56,000,000,000 We helped 415,000 families purchase, refinance or rent a home. Once again, more than half, 51 percent of the primary home purchases refinanced supported first time homebuyers and 51% of eligible purchase and refinance loans were affordable to low and moderate income families. Speaker 100:01:31On the multifamily side, 94% of the eligible rental units refinanced were similarly affordable. Beyond our efforts to make home affordable, we work to make it sustainable for both renters and homeowners. In August, we published a policy framework requiring minimum lease standards in multifamily properties with the new Freddie Mac backed loan. Beginning in February 2025, the standards require a 5 day grace period for rent payments, a 30 day notice for rent increases and a 30 day notice of a lease expiration. And in September, we reminded homeowners affected by recent hurricanes of the immediate relief options available to them. Speaker 100:02:15These include Freddie Mac's forbearance program, which offers mortgage relief for up to 12 months without incurring a late fee or penalties. We also provide dedicated resources to renters and apartment buildings to help them plan and prepare for natural disasters as well as respond and recover after they strike. Freddie Mac communities and mortgage security investors all benefit alongside renters and homeowners when families are able to continue living in their homes. Now let's take a look at the results in more detail. Our net income of $3,100,000,000 for the quarter was an increase of $420,000,000 or 16% year over year. Speaker 100:02:58This increase was primarily driven by an increase in our net revenues and a decline in non interest expense. 3rd quarter net revenues were $5,800,000,000 an increase of $148,000,000 or 3% year over year. This increase was primarily driven by higher net interest income, which increased $250,000,000 or 5% year over year. Primary drivers for the higher net interest income were lower expense related to debt and hedge accounting relationships and continued mortgage portfolio growth. Our total mortgage portfolio grew 2% year over year and ended the quarter at $3,500,000,000,000 The increase in net interest income was partially offset by $102,000,000 lower non interest income, primarily due to lower investment gains in the quarter versus the prior year. Speaker 100:03:52The benefit for credit losses was $191,000,000 this quarter, driven by credit reserve release in single family as a result of lower mortgage interest rates and a credit reserve release in multifamily due to enhancements in the credit loss estimation process. In the Q3 of 2023, we had a benefit for credit losses of $263,000,000 which was primarily driven by credit reserve release in single family due to improvements in house prices. Non interest expense of $2,200,000,000 for this quarter was lower by $393,000,000 as the prior year period included a $313,000,000 expense accrual for an adverse judgment at trial. Turning to our individual business segments, single family reported net income of $2,600,000,000 for the quarter, up $250,000,000 or 11% from the prior year quarter, primarily driven by higher net interest income and lower non interest expense. Single family net interest income of $4,700,000,000 was up 3% year over year, primarily driven by higher income on our investment portfolio, which benefited from lower expense related to debt and hedge accounting relationships. Speaker 100:05:12Non interest expense for the quarter was $2,000,000,000 down $344,000,000 or 15% from the prior year quarter as the prior year quarter included an allocation of $250,000,000 for the $313,000,000 accrual for the adverse judgment at trial and a larger decrease in credit enhancement recoveries due to a decline in expected credit losses on covered loans. Our benefit for single family credit losses this quarter was $99,000,000 primarily driven by a credit reserve release as a result of lower mortgage interest rates. In the prior year quarter, we had a benefit of $304,000,000 which was primarily driven by a credit reserve release due to improvements in home prices. Home prices increased on average 3.6% over the past year and our forecast assumes home prices will remain flat over the next 12 months and increased by 0.8% over the subsequent 12 months. The single family allowance for credit losses coverage ratio at the end of the quarter was 21 basis points, down slightly from 22 basis points a year earlier. Speaker 100:06:24New business activity picked up in the quarter to $98,000,000,000 up 15% or $13,000,000,000 from the 2nd quarter as both home purchase and refinance volume increased due to lower mortgage interest rates. The 30 year mortgage interest rate fell to 6.08 percent at the end of the 3rd quarter, the lowest we have experienced over the last 2 years and was down 78 basis points from the end of last quarter and 123 basis points lower than a year earlier. Home purchase volume of $84,000,000,000 made up 86% of our total new business activity this quarter. First time homebuyers represented 51% of new single family home purchase loans. The average estimated guarantee fee rate charged on new business was 57 basis points this quarter, up 3 basis points from last quarter. Speaker 100:07:17Our single family mortgage portfolio increased 2% year over year to $3,100,000,000,000 Credit characteristics of our single family portfolio remained strong with the weighted average current loan to value ratio at 52% and the weighted average current credit score at 755. At the end of the quarter, 62% of our single family portfolio had some form of credit enhancement. The single family serious delinquency rate increased 4 basis points this quarter to 54 basis points from the historical low of 50 basis points that we saw in the last quarter. The SDQ rate remains 9 basis points below the pre COVID rate of 63 basis points at the end of 2019. In the Q3, we helped approximately 18,000 families remain in their homes through loan workouts. Speaker 100:08:10Moving on to multifamily, the segment reported net income of $532,000,000 an increase of 47 percent or $170,000,000 from the prior year quarter. This increase was primarily driven by a benefit for credit losses in the current quarter and lower non interest expense compared to the same quarter last year. The benefit for credit losses this quarter of $92,000,000 was primarily driven by credit reserve release due to enhancements in the credit loss estimation process. In the prior year quarter, we had a provision for credit losses of $41,000,000 which was primarily driven by deterioration in overall loan performance. The multifamily allowance for credit losses coverage ratio at the end of this quarter was 49 basis points, down from 54 basis points a year earlier. Speaker 100:09:03Non interest expense was $217,000,000 down $49,000,000 or 18% year over year. The prior year quarter included an allocation of $63,000,000 for the accrual for the adverse judgment at trial. We have seen a slight pickup in demand for multifamily mortgage financing as interest rates declined this quarter. Our multifamily new business activity was $15,000,000,000 for the Q3, bringing the year to date volume to $35,000,000,000 versus $32,000,000,000 for the same period last year. In the current quarter, we provided financing for 131,000 multifamily rental units with 68% of the eligible multifamily rental units financed affordable to low income families earning 80% or less of the area median income. Speaker 100:09:54Our multifamily mortgage portfolio increased 5% year over year to $452,000,000,000 of which 93% was covered by credit enhancements. The multifamily delinquency rate was 39 basis points at the end of the quarter, up one basis point from last quarter and up 15 basis points from the end of September 2023. This increase was driven primarily by an increase in delinquent floating rate loans, including small balance loans that are in their floating rate period. 96% of these delinquent loans have credit enhancement coverage. On the capital front, our net worth increased to $56,000,000,000 representing a 26% increase year over year. Speaker 100:10:40In conclusion, let me say that Freddie Mac is fully focused on fulfilling its mission. We are at our best when delivering strong financial results and serving our important mission. We continue to support the nation by helping lenders of all sizes, providing access to sustainable and affordable home financing, addressing issues of housing inequality and providing support and assistance to homeowners who have been impacted by the recent devastating hurricanes. Thank you for joining us today.Read morePowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Freddie Mac Earnings HeadlinesMortgage Rates Remain Essentially FlatJune 12, 2025 | globenewswire.comTwo big ways Trump's plans for Fannie Mae and Freddie Mac could cost home buyersJune 10, 2025 | marketwatch.comThe Trump Dump is starting; Get out of stocks now?The first 365 days of the Trump presidency… Will be the best time to get rich in American history.June 18, 2025 | Paradigm Press (Ad)Mortgage Rates Move DownJune 5, 2025 | globenewswire.comGreystone Provides $58.6 Million Freddie Mac Loan for Multifamily Property in IllinoisJune 5, 2025 | globenewswire.comThe Trump administration wants to sell shares in Fannie Mae and Freddie Mac. How it does so will have a big impact on home buyers and homeowners.May 31, 2025 | wsj.comSee More Freddie Mac Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Freddie Mac? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Freddie Mac and other key companies, straight to your email. Email Address About Freddie MacFederal Home Loan Mortgage Corporation operates in the secondary mortgage market in the United States. It operates through two segments, Single-Family and Multifamily. The Single-Family segment purchases, securitizes, and guarantees single-family loans; and manages single-family mortgage credit and market risk, as well as manages mortgage-related investments portfolio, single-family securitization activities, and treasury functions. This segment serves mortgage banking companies, commercial banks, regional banks, community banks, credit unions, housing finance agencies, savings institutions, and non-depository financial institutions. The Multifamily segment engages in the purchase, securitization, and guarantee of multifamily loans; issuance of multifamily K certificates; manages multifamily mortgage credit and market risk; and invests in multifamily loans and mortgage-related securities. It serves banks and other financial institutions, insurance companies, money managers, hedge funds, pension funds, state and local governments, and broker dealers. Federal Home Loan Mortgage Corporation incorporated in 1970 and is headquartered in McLean, Virginia.View Freddie Mac ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Broadcom Slides on Solid Earnings, AI Outlook Still StrongFive Below Pops on Strong Earnings, But Rally May StallRed Robin's Comeback: Q1 Earnings Spark Investor HopesOllie’s Q1 Earnings: The Good, the Bad, and What’s NextBroadcom Earnings Preview: AVGO Stock Near Record HighsUlta’s Beautiful Q1 Earnings Report Points to More Gains Aheade.l.f. 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There are 2 speakers on the call. Operator00:00:00Good morning and thank you for joining us for a presentation of Freddie Mac's 3rd Quarter 2024 Financial Results. I'm Jeff Markowitz, Deputy CAO and SVP of External Affairs and Corporate Communications. We are joined today by our Interim Chief Financial Officer, Jim Whitlinger. Before we begin, we'd like to point out that during the call, Mr. Whitlinger may make forward looking statements based on assumptions about the company's key business drivers and other factors. Operator00:00:23Changes in these factors could cause the company's actual results to materially vary from its expectations. A description of those factors can be found in the company's quarterly report on Form 10 Q filed today. You'll find a 10 Q, earnings press release and related materials posted on the Investor Relations section of freddiemac.com. This call is recorded and a replay will soon be available on freddiemac.com. We ask that the call not be rebroadcast or transcribed. Operator00:00:49With that, I'll turn the call over to Freddie Mac's Interim CFO, Speaker 100:00:53Jim Whitlinger. Good morning and thank you for joining our call to review Freddie Mac's 3rd quarter performance. The company delivered another solid quarter. We earned $3,100,000,000 in the 3rd quarter and our net worth increased to $56,000,000,000 We helped 415,000 families purchase, refinance or rent a home. Once again, more than half, 51 percent of the primary home purchases refinanced supported first time homebuyers and 51% of eligible purchase and refinance loans were affordable to low and moderate income families. Speaker 100:01:31On the multifamily side, 94% of the eligible rental units refinanced were similarly affordable. Beyond our efforts to make home affordable, we work to make it sustainable for both renters and homeowners. In August, we published a policy framework requiring minimum lease standards in multifamily properties with the new Freddie Mac backed loan. Beginning in February 2025, the standards require a 5 day grace period for rent payments, a 30 day notice for rent increases and a 30 day notice of a lease expiration. And in September, we reminded homeowners affected by recent hurricanes of the immediate relief options available to them. Speaker 100:02:15These include Freddie Mac's forbearance program, which offers mortgage relief for up to 12 months without incurring a late fee or penalties. We also provide dedicated resources to renters and apartment buildings to help them plan and prepare for natural disasters as well as respond and recover after they strike. Freddie Mac communities and mortgage security investors all benefit alongside renters and homeowners when families are able to continue living in their homes. Now let's take a look at the results in more detail. Our net income of $3,100,000,000 for the quarter was an increase of $420,000,000 or 16% year over year. Speaker 100:02:58This increase was primarily driven by an increase in our net revenues and a decline in non interest expense. 3rd quarter net revenues were $5,800,000,000 an increase of $148,000,000 or 3% year over year. This increase was primarily driven by higher net interest income, which increased $250,000,000 or 5% year over year. Primary drivers for the higher net interest income were lower expense related to debt and hedge accounting relationships and continued mortgage portfolio growth. Our total mortgage portfolio grew 2% year over year and ended the quarter at $3,500,000,000,000 The increase in net interest income was partially offset by $102,000,000 lower non interest income, primarily due to lower investment gains in the quarter versus the prior year. Speaker 100:03:52The benefit for credit losses was $191,000,000 this quarter, driven by credit reserve release in single family as a result of lower mortgage interest rates and a credit reserve release in multifamily due to enhancements in the credit loss estimation process. In the Q3 of 2023, we had a benefit for credit losses of $263,000,000 which was primarily driven by credit reserve release in single family due to improvements in house prices. Non interest expense of $2,200,000,000 for this quarter was lower by $393,000,000 as the prior year period included a $313,000,000 expense accrual for an adverse judgment at trial. Turning to our individual business segments, single family reported net income of $2,600,000,000 for the quarter, up $250,000,000 or 11% from the prior year quarter, primarily driven by higher net interest income and lower non interest expense. Single family net interest income of $4,700,000,000 was up 3% year over year, primarily driven by higher income on our investment portfolio, which benefited from lower expense related to debt and hedge accounting relationships. Speaker 100:05:12Non interest expense for the quarter was $2,000,000,000 down $344,000,000 or 15% from the prior year quarter as the prior year quarter included an allocation of $250,000,000 for the $313,000,000 accrual for the adverse judgment at trial and a larger decrease in credit enhancement recoveries due to a decline in expected credit losses on covered loans. Our benefit for single family credit losses this quarter was $99,000,000 primarily driven by a credit reserve release as a result of lower mortgage interest rates. In the prior year quarter, we had a benefit of $304,000,000 which was primarily driven by a credit reserve release due to improvements in home prices. Home prices increased on average 3.6% over the past year and our forecast assumes home prices will remain flat over the next 12 months and increased by 0.8% over the subsequent 12 months. The single family allowance for credit losses coverage ratio at the end of the quarter was 21 basis points, down slightly from 22 basis points a year earlier. Speaker 100:06:24New business activity picked up in the quarter to $98,000,000,000 up 15% or $13,000,000,000 from the 2nd quarter as both home purchase and refinance volume increased due to lower mortgage interest rates. The 30 year mortgage interest rate fell to 6.08 percent at the end of the 3rd quarter, the lowest we have experienced over the last 2 years and was down 78 basis points from the end of last quarter and 123 basis points lower than a year earlier. Home purchase volume of $84,000,000,000 made up 86% of our total new business activity this quarter. First time homebuyers represented 51% of new single family home purchase loans. The average estimated guarantee fee rate charged on new business was 57 basis points this quarter, up 3 basis points from last quarter. Speaker 100:07:17Our single family mortgage portfolio increased 2% year over year to $3,100,000,000,000 Credit characteristics of our single family portfolio remained strong with the weighted average current loan to value ratio at 52% and the weighted average current credit score at 755. At the end of the quarter, 62% of our single family portfolio had some form of credit enhancement. The single family serious delinquency rate increased 4 basis points this quarter to 54 basis points from the historical low of 50 basis points that we saw in the last quarter. The SDQ rate remains 9 basis points below the pre COVID rate of 63 basis points at the end of 2019. In the Q3, we helped approximately 18,000 families remain in their homes through loan workouts. Speaker 100:08:10Moving on to multifamily, the segment reported net income of $532,000,000 an increase of 47 percent or $170,000,000 from the prior year quarter. This increase was primarily driven by a benefit for credit losses in the current quarter and lower non interest expense compared to the same quarter last year. The benefit for credit losses this quarter of $92,000,000 was primarily driven by credit reserve release due to enhancements in the credit loss estimation process. In the prior year quarter, we had a provision for credit losses of $41,000,000 which was primarily driven by deterioration in overall loan performance. The multifamily allowance for credit losses coverage ratio at the end of this quarter was 49 basis points, down from 54 basis points a year earlier. Speaker 100:09:03Non interest expense was $217,000,000 down $49,000,000 or 18% year over year. The prior year quarter included an allocation of $63,000,000 for the accrual for the adverse judgment at trial. We have seen a slight pickup in demand for multifamily mortgage financing as interest rates declined this quarter. Our multifamily new business activity was $15,000,000,000 for the Q3, bringing the year to date volume to $35,000,000,000 versus $32,000,000,000 for the same period last year. In the current quarter, we provided financing for 131,000 multifamily rental units with 68% of the eligible multifamily rental units financed affordable to low income families earning 80% or less of the area median income. Speaker 100:09:54Our multifamily mortgage portfolio increased 5% year over year to $452,000,000,000 of which 93% was covered by credit enhancements. The multifamily delinquency rate was 39 basis points at the end of the quarter, up one basis point from last quarter and up 15 basis points from the end of September 2023. This increase was driven primarily by an increase in delinquent floating rate loans, including small balance loans that are in their floating rate period. 96% of these delinquent loans have credit enhancement coverage. On the capital front, our net worth increased to $56,000,000,000 representing a 26% increase year over year. Speaker 100:10:40In conclusion, let me say that Freddie Mac is fully focused on fulfilling its mission. We are at our best when delivering strong financial results and serving our important mission. We continue to support the nation by helping lenders of all sizes, providing access to sustainable and affordable home financing, addressing issues of housing inequality and providing support and assistance to homeowners who have been impacted by the recent devastating hurricanes. Thank you for joining us today.Read morePowered by