Freddie Mac Q3 2026 Earnings Results & Report

Freddie Mac EPS Results

• Actual EPS: $0.01
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Freddie Mac Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Freddie Mac (OTCMKTS:FMCC), formally known as the Federal Home Loan Mortgage Corporation, is a government-sponsored enterprise focused on supporting liquidity, stability and affordability in the U.S. housing market. It operates primarily in the secondary mortgage market rather than making most home loans directly to consumers.

The company purchases residential mortgage loans from approved lenders, providing those institutions with funds to make additional loans. Freddie Mac also pools eligible mortgages into securities that it guarantees and sells to investors. Its activities include financing for single-family homes and multifamily properties, as well as programs intended to expand access to mortgage credit and rental housing.

Established by Congress in 1970, Freddie Mac serves the U.S. housing market through a network of lenders, investors and other housing-market participants. The company has been under the conservatorship of the Federal Housing Finance Agency since 2008, following the financial crisis. Its common stock trades over the counter under the symbol FMCC.

Freddie Mac Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Net income rose 17% year over year to $3.2 billion, while net revenues increased 19% to $6.8 billion, supported by higher net interest and non-interest income. Non-interest expense declined 6% due to efficiency and expense-discipline efforts.
• Positive Sentiment: Freddie Mac’s net worth reached nearly $81 billion, up 20% year over year, and its mortgage portfolio grew 2% to nearly $3.7 trillion after providing $114 billion of housing-market liquidity.
• Negative Sentiment: Credit costs increased sharply, with the provision for credit losses rising to $800 million from $175 million a year earlier. Higher projected mortgage rates extended expected loan lives, while single-family serious delinquencies rose to 61 basis points and multifamily delinquencies increased to 58 basis points.
• Negative Sentiment: Elevated mortgage rates continued to weigh on housing activity, with multifamily new business volume falling to $16 billion from $25 billion a year earlier. Multifamily property prices also declined and cap rates increased, although the company said its shift toward fully guaranteed securitizations should make earnings more stable over time.
• Negative Sentiment: Despite retained-earnings growth, Freddie Mac reported a $98 billion regulatory-capital shortfall excluding buffers, largely because $73 billion of senior preferred stock does not qualify as regulatory capital.

Presentation

[Fred Solomon, Director of Financial Communications at Freddie Mac]

Good morning, and thanks for joining us for a presentation of Freddie Mac's third quarter 2026 financial results. I'm Fred Solomon, Director of Financial Communications. We are joined today by Executive Vice President and 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. Changes 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 will find the 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 this call not be rebroadcast or transcribed.

[Fred Solomon, Director of Financial Communications at Freddie Mac]

With that, I'll turn the call over to Freddie Mac CFO, Jim Whitlinger.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Good morning, and thank you for joining us as I review Freddie Mac's third quarter financial results. To accompany today's discussion, we've published our earnings release, presentation, financial supplement and Form 10-Q. Together, these materials provide additional detail on our financial performance, business results and capital position. I'll start with the key highlights on slide two of our earnings presentation. Freddie Mac's support during the third quarter helped 420,000 families buy, refinance or rent a home. The majority of the houses and apartments we financed in the quarter were affordable to working families earning 120% or less of their area median income. These included 91% of eligible rental units and 56% of single family homes. Of those purchasing a primary residence, 51% were first-time homebuyers. These outcomes demonstrate how our financial strength enables us to provide liquidity and advance affordability across the housing market.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Freddie Mac reported $3.2 billion of net income, taking our net worth to $81 billion. Our results reflect the strength of our core guaranteed business, disciplined risk management and continued execution against our strategic priorities. The net worth we are building further strengthens our ability to support the housing market across economic cycles. The total mortgage portfolio increased 2% year-over-year to nearly $3.7 trillion as we provided $114 billion of liquidity to the U.S. housing market. Now let's look at the quarterly financial results that support this important work. I'll begin with our third quarter 2026 results, followed by our single family and multifamily segments performance. I'll finish with an update on our net worth and regulatory capital. We'll start on slide three with our third quarter 2026 financial performance.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Our net income of $3.2 billion increased 17% year-over-year, reflecting higher net revenues from both non-interest and net interest income. These results continue to reflect strong execution during the quarter. We grew net revenues 19% year-over-year to $6.8 billion. The increase was primarily driven by higher non-interest income, as well as a $422 million, or 8% increase in net interest income from the prior year quarter. The growth in net interest income reflects the evolving mix of our multifamily business and continued growth of our mortgage portfolio, which increased 2% year-over-year. Our net interest yield increased 3 basis points year-over-year to 67 basis points, reflecting the positive impact of our scale. We recorded $933 million of non-interest income in the quarter, up $649 million from the prior year quarter.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Non-interest income can vary quarter-to-quarter, particularly due to investment gains and losses, which are impacted by market conditions, mainly the movement in spreads and interest rates. Impacts from interest rate risk management activities drove this quarter's increase. We recorded an $800 million provision for credit losses in the quarter, compared with a $175 million provision in the prior year quarter. The provision primarily reflected a single family credit reserve build resulting from an increase in projected future mortgage interest rates as well as new acquisitions, while current portfolio performance remained stable. Higher projected mortgage rates increased the period over which we are exposed to potential credit losses by extending the expected life of the loans due to lower prepayments. By comparison, the third quarter 2025 credit reserve build in single family was attributable mainly to new acquisitions.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Our third quarter non-interest expense was nearly $2 billion, down 6% year-over-year, reflecting continued focus on operational efficiency and expense discipline. We remain focused on simplifying how we operate and using technology to improve productivity while continuing to invest in capabilities that strengthen our business and support the housing market over the long-term horizon. We grew our total mortgage portfolio to nearly $3.7 trillion as of September 30th, driven by 1% and 6% increases year-over-year in our single family and multifamily portfolios, respectively. Turning to single family results on slide four, the segment reported strong third quarter net income of $2.7 billion, an increase of 16% year-over-year. This improvement reflects higher net revenues and lower non-interest expense, partially offset by a larger provision for credit losses compared with the prior year quarter.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Segment net interest income for the quarter of $5.3 billion was up $247 million, or 5% year-over-year, driven by continued mortgage portfolio growth. The increase in non-interest income was primarily driven by changes in interest rates in each respective period. In third quarter 2026, gains on derivatives used in interest rate risk management activities were offset by losses on investment securities, while in the third quarter 2025, losses on derivatives used in interest rate risk management activities were offset by gains on investment securities. We recorded a $685 million provision for credit losses in the quarter, compared with a $118 million provision in third quarter 2025. Once again, this provision is due to a credit reserve build driven by an increase in projected future mortgage interest rates as well as new acquisitions.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

In contrast, the third quarter 2025 provision was mainly driven by a credit reserve build attributable to new acquisitions. The single-family allowance for credit losses coverage ratio was 22 basis points at the end of third quarter 2026. That was down 2 basis points year-over-year and up 3 basis points quarter-over-quarter. Net charge-offs for the quarter totaled $132 million, compared with $80 million in the prior year quarter. House prices rose by 0.5% during third quarter 2026, compared with a 0.2% increase in the third quarter 2025. Mortgage rates ended the quarter at 7.03%, the highest level since the beginning of the year, continuing to weigh on market activity. Despite elevated rates, the market remains supported by modest house price growth and continued demand for housing.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Our current forecast assumes house prices will grow by 1.3% over the next 12 months and 1.5% over the subsequent 12 months. As of September 30, 2026, the serious delinquency rate for our single-family portfolio was 61 basis points, up 4 basis points over the prior year quarter and up 1 basis point quarter-over-quarter. The year-over-year increase was primarily driven by higher serious delinquency rates for loans originated during 2022 through 2024. In third quarter 2026, we helped approximately 21,000 families remain in their homes through loan workouts. At quarter end, 60% of our single-family portfolio had some form of credit enhancement. The portfolio's weighted average current loan-to-value ratio was 54%, and its weighted average current credit score was 755. During the third quarter of 2026, we acquired $98 billion of new business.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Purchased loans accounted for 81% of originations, while refinance loans accounted for 19% of the total volume. As you can see on slide five, the credit profile of our single-family new business remains strong, with an average estimated loan-to-value ratio of 77%, flat year-over-year, and weighted average original credit score of 759 compared with 756 in the prior year quarter. In April 2026, we announced a limited rollout to accept loans delivered with VantageScore 4.0 from approved sellers. Effective September 2026, we expanded the availability of VantageScore 4.0 to all sellers. All sellers may now use VantageScore 4.0 without prior written approval when originating and selling eligible mortgages to Freddie Mac. This quarter, 6% of the loans we acquired were assessed using VantageScore 4.0 for pricing.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Its broader use supports a more modern and competitive credit scoring system with the potential to lower cost and advance housing affordability for borrowers. The weighted average DTI ratio trend remained flat year-over-year. These indicators reinforce the quality of our new originations. Turning to multifamily results on slide 6, rent growth remains positive but subdued, while occupancy has remained relatively steady this year. New supply has moderated during the year and demand has stayed relatively stable. Multifamily property prices have declined throughout much of the year and cap rates have increased. The segment delivered third quarter 2026 net income of $521 million, up 22% year-over-year. The increase was supported by higher net revenues, partly offset by our higher credit provision. Third quarter net revenues increased 17% year-over-year to $1 billion, benefiting from higher net interest income.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Net interest income increased 43%, driven by higher guarantee interest income as our business strategy shifted toward fully guaranteed securitizations. This shift is expected to enhance the stability of multifamily earnings over time. The increase in net interest income was partially offset by a 7% decline in non-interest income. On the credit side, we recorded a $115 million provision for credit losses, mainly due to the multifamily mortgage portfolio's overall credit performance deterioration. This was partially offset by a reserve release resulting from updates to our credit loss estimation process. In the prior year quarter, we had a provision expense of $57 million, which was attributable to new loan purchase commitment and acquisition activity, coupled with deterioration in the credit performance of certain delinquent loans.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

The multifamily allowance for credit losses coverage ratio was 30 basis points at the end of third quarter 2026, compared with 36 basis points for second quarter 2026 and 43 basis points for third quarter 2025. Total multifamily new business activity reached $16 billion in third quarter 2026, down from $25 billion in the third quarter of 2025, primarily driven by the elevated mortgage interest rate environment. Year to date, 66% of new business activity based on unpaid principal balance was mission-driven affordable housing. During third quarter 2026, we securitized nearly $17 billion of loans. Nearly all of this volume consisted of fully guaranteed securitizations, which increased 31% year-over-year, consistent with our business strategy shift towards fully guaranteed securitizations. At September 30, 2026, the average guarantee fee rate charged on our total guarantee exposures increased to 60 basis points, up six basis points from the prior year quarter.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

This increase was primarily due to continued growth in our fully guaranteed securitization issuances, for which we charge higher guarantee fee rates. Our multifamily mortgage portfolio at the end of third quarter 2026 was $510 billion, an increase of 6% year-over-year. The multifamily delinquency rate was 58 basis points at the end of the third quarter, up from 51 basis points at the end of both the third quarter 2025 and second quarter 2026. This increase reflects stress associated with the elevated interest rate environment. 92% of delinquent loans in the multifamily mortgage portfolio had credit enhancement coverage. In addition, 89% of the multifamily mortgage portfolio was covered by credit enhancements at quarter end.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

Finally, as shown on slide seven of our earnings presentation, we delivered strong net worth growth, ending the quarter at nearly $81 billion, up 20% year-over-year, further strengthening our financial foundation and capacity to support the housing market. Under our regulatory capital rule, total capital required at quarter end was $162 billion, including $60 billion of stress and stability buffers. Retained earnings continue to strengthen our capital position and increased our available capital by $45 billion since the end of 2022. Excluding buffers, our capital shortfall was $98 billion at the end of the third quarter 2026, largely because the $73 billion of senior preferred stock does not qualify as regulatory capital. I will close with this thought. Our third quarter results demonstrate the strength of our business and the progress we are making toward a stronger Freddie Mac.

[Jim Whitlinger, EVP and CFO at Freddie Mac]

We're growing our financial strength, applying disciplined decision-making and risk management, and continuing to invest in the capabilities that can make the housing system work better. That includes simplifying our processes, improving the tools available to lenders and borrowers, and using technology to operate more efficiently and make better decisions. Ultimately, financial strength matters because of what it enables us to do. It gives us greater capacity to provide liquidity throughout the economic cycle, support sustainable homeownership, and help make housing finance more efficient and affordable. We remain focused on delivering against those priorities and building on the progress we made this quarter. Thank you for joining us today.

Participants

Executives

• Fred Solomon, Director of Financial Communications
• Jim Whitlinger, EVP and CFO