Freddie Mac Q1 Earnings Call Highlights

Key Points

• Freddie Mac reported a strong Q1 — net income of $3.6 billion (up 27% YoY), net revenues of $6.1 billion, a $3.7 trillion mortgage portfolio and nearly $74 billion in net worth, while providing $116 billion of liquidity and helping about 380,000 families.
• Single‑Family strength and credit reserve release — Single‑Family net income rose to $3.0 billion (+32% YoY) with refinance volume at 42% (the highest in four years); Freddie Mac recorded a $311 million reserve release after raising house‑price growth forecasts and reported strong portfolio credit metrics (weighted avg LTV 53%, avg score 753, serious delinquency 60 bps).
• Multifamily strategy shift and capital update — Multifamily income was $582 million as the business shifted toward fully guaranteed securitizations (securitized $24 billion, new business +25%), boosting guarantee fee income; net worth rose 18% YoY to $74 billion but required regulatory capital was $161 billion, leaving a $105 billion shortfall excluding buffers despite a $37 billion reduction in the capital deficit since 2022.

Freddie Mac OTCMKTS: FMCC reported what it described as a “strong quarter” to start 2026, posting first-quarter net income of $3.6 billion and growing net worth to nearly $74 billion, according to Executive Vice President and Chief Financial Officer Jim Whitlinger.

During the company’s earnings presentation, Whitlinger said Freddie Mac’s total mortgage portfolio increased to $3.7 trillion as it provided $116 billion of liquidity to the U.S. housing market. He added that Freddie Mac’s activity in the quarter helped about 380,000 families “buy, refinance, or rent a home,” with the majority of homes and apartments financed considered affordable to working families earning 120% or less of area median income.

First-quarter results: higher revenues and a credit reserve release

Whitlinger said first-quarter net income rose 27% from the year-ago period, “reflecting higher net revenues and a credit reserve release in the current period.” He reported net revenues of $6.1 billion, up 5% year over year, driven primarily by net interest income of $5.6 billion, which increased 10% from the prior-year quarter.

He attributed the net interest income growth to continued expansion in the mortgage portfolio—up 2% year over year—and growth in the mortgage-related investments portfolio. Net interest margin increased 5 basis points year over year to 65 basis points, which Whitlinger said reflected “the positive impact of our scale.”

Non-interest income was $514 million, down from $750 million in the first quarter of 2025. Whitlinger said the decline was primarily due to lower guarantee income and lower net investment gains, citing “the strategic shift in the Multifamily business model” as well as losses from debt extinguishments during the quarter.

On credit, Freddie Mac recorded a $320 million benefit for credit reserves, compared with a $280 million provision expense in the prior-year quarter. Whitlinger said the benefit resulted from a Single-Family reserve release that reflected changes in the company’s views of forecasted house price growth.

Non-interest expense totaled $2 billion, down 3% year over year, which Whitlinger said was driven by decreases in salaries and employee benefits and lower credit enhancement expense.

Single-Family: $3.0 billion in net income, refinance activity rises

Freddie Mac’s Single-Family segment generated first-quarter net income of $3.0 billion, up 32% year over year, which Whitlinger attributed to “strong net revenues.” Segment net revenues increased 5% to $5.2 billion, supported by an 8% rise in net interest income tied to mortgage portfolio growth and expansion in the mortgage-related investments portfolio.

The company recorded a $311 million benefit for credit reserves in Single-Family during the quarter, compared with a $228 million provision expense a year earlier. Whitlinger again pointed to changes in Freddie Mac’s forecasted house price growth rates. He said house prices rose 0.1% during the first quarter of 2026 versus a 0.3% increase in the first quarter of 2025, and he outlined the company’s updated expectations: Freddie Mac’s forecast assumes house prices will grow 2.3% over the next 12 months and 2.4% over the subsequent 12 months, above the company’s December 2025 forecast of 0.5% and 1.4%, respectively.

Whitlinger said the Single-Family allowance for credit losses coverage ratio was 22 basis points at quarter end, up 1 basis point year over year and down 1 basis point from the prior quarter. Net charge-offs were $118 million, down from $164 million a year ago.

He characterized portfolio credit metrics as strong, citing a weighted average current loan-to-value ratio of 53% and a weighted average credit score of 753. The Single-Family serious delinquency rate was 60 basis points as of March 31, 2026, representing a 1 basis point increase versus both the prior year and prior quarter.

Freddie Mac reported 51% of total GSE Single-Family market share for the quarter. New business volume totaled $103 billion, which Whitlinger said was driven by strength in refinance activity. Refinance loans were 42% of total volume, which he said was “the highest quarterly refinance share we have seen in the past four years.”

Whitlinger noted that mortgage rates ended the quarter at 6.38%, up from 6.15% at year-end, and said rates fell to 5.98% during the quarter—the “first time below 6% since 2022.” He added that Freddie Mac helped approximately 24,000 families remain in their homes through loan workouts in the first quarter, and said 62% of the Single-Family portfolio had some form of credit enhancement at quarter end.

Multifamily: strategy shift toward fully guaranteed securitizations

In Multifamily, Freddie Mac reported first-quarter net income of $582 million, up 9% year over year. Whitlinger said the increase was supported by higher net revenues and “a slight benefit for credit losses” compared with a provision expense in the prior-year quarter.

Multifamily net revenues increased 3% year over year to $1.0 billion, benefiting from higher net interest income. Whitlinger said net interest income rose 43%, driven by higher guarantee fee income as the business strategy shifted toward fully guaranteed securitizations. He added that the rise in net interest income was partially offset by a 22% decline in non-interest income “as the revenue mix shifted in line with the business strategy change.”

On credit, the company recorded a $9 million benefit for credit reserves in Multifamily, compared with a $52 million expense in the first quarter of 2025. The Multifamily allowance for credit losses coverage ratio ended the quarter at 42 basis points, down from 46 basis points in the fourth quarter of 2025 and 49 basis points a year earlier. Net charge-offs were $63 million in the quarter.

Total Multifamily new business activity was $13 billion, an increase of 25% year over year, which Whitlinger attributed to “strong demand for Multifamily financing.” He said approximately 66% of first-quarter activity (based on unpaid principal balance) was mission-driven affordable housing. The company securitized $24 billion of loans during the quarter, with Whitlinger noting that nearly all were fully guaranteed securitizations, “marking a more than twofold increase year-over-year.”

The average guarantee fee rate on total guarantee exposures increased to 58 basis points, up 6 basis points from the prior year, which Whitlinger said was primarily driven by growth in fully guaranteed securitization issuances that carry higher guarantee fee rates.

Freddie Mac’s Multifamily mortgage portfolio ended the quarter at $498 billion, up 7% year over year. The Multifamily delinquency rate was 43 basis points, down from 46 basis points a year ago and 44 basis points in the prior quarter. Whitlinger said 94% of delinquent Multifamily loans had credit enhancement coverage, and that 91% of the overall Multifamily mortgage portfolio was covered by credit enhancements at quarter end.

Capital position and operational update

Whitlinger said Freddie Mac ended the quarter with net worth of $74 billion, up 18% year over year. Under the company’s regulatory capital rule, he said total required capital was $161 billion at quarter end, including $60 billion of stress and stability buffers.

Whitlinger said Freddie Mac continues to reduce its capital deficit, which he noted has declined by $37 billion since the end of 2022. Excluding buffers, he said the company’s capital shortfall was $105 billion at the end of the first quarter, “largely because the $73 billion of Senior Preferred Stock does not qualify as regulatory capital.”

He also highlighted an operational milestone, saying Freddie Mac became “the first GSE to take loans from acquisition to securitization with VantageScore 4.0.” Whitlinger said the addition of a credit scoring alternative for qualified mortgages is intended to promote competition that can benefit consumers, lenders, and the broader housing market.

Closing the presentation, Whitlinger said it was “a very good start to the year” and noted that the company added $3.5 billion to net worth during the quarter while continuing to operate as what he described as a “more streamlined, efficient organization.”

About Freddie Mac OTCMKTS: FMCC

Freddie Mac OTCMKTS: FMCC, officially the Federal Home Loan Mortgage Corporation, is a government-sponsored enterprise chartered by Congress in 1970 to enhance liquidity and stability in the U.S. housing finance system. Headquartered in McLean, Virginia, the company operates under the supervision of the Federal Housing Finance Agency (FHFA) and carries a congressional mandate to support affordable, sustainable homeownership and rental housing markets nationwide.

The company's primary business activities involve purchasing mortgage loans from approved lenders, pooling them into mortgage-backed securities (MBS), and guaranteeing the timely payment of principal and interest to investors.

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