Freddie Mac Q2 Earnings Call Highlights

Freddie Mac OTCMKTS: FMCC reported second-quarter net income of $3.8 billion, up 61% from a year earlier, as higher net interest income, lower expenses and a credit reserve release lifted results. The government-sponsored enterprise ended the quarter with net worth of nearly $78 billion and a total mortgage portfolio of $3.7 trillion.

Chief Financial Officer Jim Whitlinger said the company provided about $128 billion of liquidity to the U.S. housing market during the quarter and helped nearly 439,000 families buy, refinance or rent homes. He said 91% of eligible rental units financed and 54% of single-family homes financed were affordable to households earning 120% or less of area median income. Among homebuyers purchasing a primary residence, 52% were first-time buyers.

Revenue Growth and Credit Reserve Release

Net revenues rose 1% year over year to $6 billion. Net interest income increased $711 million, or 13%, to reflect continued mortgage portfolio growth and an increase in fully guaranteed multifamily securitizations following a change in business strategy. Freddie Mac’s net interest yield rose seven basis points from the prior-year period to 69 basis points.

Non-interest income moved to a loss of $19 million from income of $617 million in the second quarter of 2025. Whitlinger attributed the change primarily to net investment losses in the current quarter versus investment gains a year earlier, as well as lower guarantee income.

The company recorded an $880 million benefit for credit losses, compared with a $783 million provision in the prior-year quarter. The benefit was primarily driven by a release of single-family reserves following updates to Freddie Mac’s process for generating future house-price scenarios.

Non-interest expense declined 3% year over year to $2.1 billion, which Whitlinger said reflected the company’s continued operational-efficiency efforts.

Single-Family Income Rises as Refinance Activity Strengthens

Freddie Mac’s single-family segment generated net income of $3.3 billion, a 57% increase from a year earlier. The increase primarily reflected the current-quarter credit loss benefit compared with a provision in the prior-year period.

Single-family net interest income rose 11%, or $551 million, to $5.4 billion. The increase reflected 1% growth in the single-family mortgage portfolio and lower expenses associated with debt and hedge accounting relationships. Investment losses tied primarily to interest-rate management activities partly offset the gain.

The segment recorded an $846 million credit-loss benefit, compared with a $622 million provision in the second quarter of 2025. House prices increased 0.7% in the second quarter, compared with a 0.2% decline in the year-earlier quarter. Freddie Mac’s forecast assumes house prices will rise 1.7% over the next 12 months and 2.1% over the following 12 months, above its December 2025 forecast of 0.5% and 1.4%, respectively.

• Single-family new business totaled $110 billion, with refinancings representing 33% of volume.
• The single-family serious delinquency rate was 60 basis points at June 30, up five basis points year over year and unchanged from the first quarter.
• Net charge-offs totaled $116 million, compared with $73 million in the prior-year quarter.
• The portfolio’s weighted-average current loan-to-value ratio was 53%, while its weighted-average credit score was 755.
• Freddie Mac helped approximately 22,000 families remain in their homes through loan workouts during the quarter.

Mortgage rates ended the quarter at 6.49%, after reaching 6.53% during the period, according to Whitlinger. He said elevated rates continued to affect market activity, though the company remained focused on market liquidity and access to affordable housing finance.

Multifamily Business Benefits From Strategy Shift

The multifamily segment reported net income of $561 million, up 90% from a year earlier. Net revenues increased 14% to $891 million, supported by a 40% rise in net interest income.

Whitlinger said higher guarantee interest income resulted from the business strategy shift toward fully guaranteed securitizations, a change expected to improve the stability of multifamily earnings over time. Non-interest income declined 13% as the revenue mix changed.

Multifamily recorded a $34 million credit-loss benefit, compared with a $161 million expense in the year-earlier quarter. The multifamily allowance for credit losses coverage ratio was 36 basis points at quarter-end, down from 52 basis points a year earlier and 42 basis points in the first quarter.

Multifamily new business activity rose 58% year over year to $18 billion, aided by a larger pipeline entering 2026 and the execution of competitive strategies. Year to date, 66% of that activity, based on unpaid principal balance, was mission-driven affordable housing. Freddie Mac securitized $23 billion of loans during the quarter, nearly all of them fully guaranteed securitizations, representing a 59% increase from a year earlier.

The multifamily mortgage portfolio reached $505 billion, up 8% year over year. The multifamily delinquency rate rose to 51 basis points from 47 basis points a year earlier and 43 basis points in the prior quarter, primarily due to stress associated with elevated interest rates and small-balance loans. Whitlinger said 92% of the multifamily mortgage portfolio had credit enhancement coverage, including 91% of delinquent loans.

Capital Position Continues to Build

Freddie Mac’s net worth increased 20% from a year earlier to $78 billion. Under its regulatory capital rule, total required capital was $161 billion at quarter-end, including $60 billion in stress and stability buffers.

The company said its capital deficit has declined by $41 billion since the end of 2022. Excluding buffers, its capital shortfall was $101 billion at the end of the second quarter, largely because $73 billion of senior preferred stock does not qualify as regulatory capital.

Whitlinger said Freddie Mac is continuing to update systems and policies to manage risk and support loan acquisitions across economic environments. He cited new credit-scoring models, faster default reporting from servicers, streamlining loan processing, fraud detection and the use of artificial intelligence to help employees make faster and more informed decisions.

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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