What Freddie Mac (FMCC) Said on Its Q3 Earnings Call

Key Points

• Freddie Mac’s third-quarter net income rose 17% to $3.2 billion, while net revenues increased 19% to $6.8 billion. Growth in net interest and non-interest income outweighed a sharp increase in the credit-loss provision to $800 million.
• The company provided $114 billion in housing-market liquidity and helped 420,000 families during the quarter, with its mortgage portfolio reaching nearly $3.7 trillion. However, single-family and multifamily delinquency rates edged higher amid elevated mortgage rates.
• Freddie Mac’s net worth climbed 20% year over year to nearly $81 billion, but it still reported a $98 billion regulatory-capital shortfall excluding required stress and stability buffers, largely because senior preferred stock does not qualify as regulatory capital.

Freddie Mac OTCMKTS: FMCC reported third-quarter 2026 net income of $3.2 billion, up 17% from a year earlier, as higher net interest income and non-interest income more than offset a larger provision for credit losses. Net worth rose to nearly $81 billion at Sept. 30, an increase of 20% year over year.

Executive Vice President and Chief Financial Officer Jim Whitlinger said the company provided $114 billion of liquidity to the U.S. housing market during the quarter and helped 420,000 families buy, refinance or rent a home. Freddie Mac's total mortgage portfolio increased 2% from a year earlier to nearly $3.7 trillion.

“Our results reflect the strength of our core guaranteed business, disciplined risk management and continued execution against our strategic priorities,” Whitlinger said.

Revenue Growth and Higher Credit Provision

Net revenues increased 19% year over year to $6.8 billion. Net interest income rose $422 million, or 8%, from the prior-year quarter, while the net interest yield increased 3 basis points to 67 basis points. Whitlinger attributed the net interest income growth to the evolving mix of Freddie Mac’s multifamily business and continued expansion of its mortgage portfolio.

Non-interest income totaled $933 million, compared with $284 million a year earlier. Whitlinger said the increase was driven by interest-rate risk management activities, noting that non-interest income can fluctuate with investment gains and losses affected by interest rates and spreads.

Freddie Mac recorded an $800 million provision for credit losses, up from $175 million in the third quarter of 2025. The provision primarily reflected a single-family credit reserve build tied to higher projected future mortgage rates and new loan acquisitions. Higher projected rates extend the expected life of loans because of lower anticipated prepayments, increasing the period during which the company is exposed to potential credit losses.

Non-interest expense was nearly $2 billion, down 6% from a year earlier. Whitlinger said the company continues to focus on operational efficiency, simplification and technology investments.

Single-Family Income Rises as Delinquencies Edge Higher

Freddie Mac’s single-family segment generated net income of $2.7 billion, up 16% year over year. Net interest income in the segment rose 5% to $5.3 billion, supported by mortgage portfolio growth, while lower non-interest expense also contributed to the increase.

The single-family credit-loss provision was $685 million, up from $118 million a year earlier, reflecting the reserve build related to projected mortgage rates and new acquisitions. Net charge-offs were $132 million, compared with $80 million in the prior-year quarter.

The serious delinquency rate for the single-family portfolio was 61 basis points at the end of September, up 4 basis points from a year earlier and 1 basis point sequentially. Whitlinger said the year-over-year increase was primarily driven by higher serious delinquency rates among loans originated from 2022 through 2024.

Mortgage rates ended the quarter at 7.03%, their highest level since the start of the year, according to Whitlinger. Freddie Mac said house prices rose 0.5% during the quarter and forecast house-price growth of 1.3% over the next 12 months and 1.5% over the following 12 months.

During the quarter, Freddie Mac acquired $98 billion of single-family new business. Purchase loans represented 81% of originations, while refinancings represented 19%. The company said the average estimated loan-to-value ratio on new business was 77%, while the weighted average original credit score was 759.

Freddie Mac also expanded availability of VantageScore 4.0 in September to all sellers for eligible mortgage originations. Six percent of the loans acquired during the quarter were assessed using VantageScore 4.0 for pricing.

Multifamily Business Shifts Toward Fully Guaranteed Securitizations

The multifamily segment posted net income of $521 million, up 22% from the prior-year quarter. Net revenues increased 17% to $1 billion, as net interest income rose 43% on higher guarantee interest income.

Whitlinger said the increase reflected a business strategy shift toward fully guaranteed securitizations, which the company expects will improve the stability of multifamily earnings over time. Freddie Mac securitized nearly $17 billion of multifamily loans during the quarter, with nearly all of that volume consisting of fully guaranteed securitizations. Such securitizations increased 31% year over year.

Multifamily new-business activity fell to $16 billion from $25 billion a year earlier, which Whitlinger attributed primarily to elevated mortgage rates. Year to date, 66% of new-business activity based on unpaid principal balance was mission-driven affordable housing.

The multifamily segment recorded a $115 million credit-loss provision, compared with $57 million a year earlier. The company cited deterioration in overall multifamily mortgage portfolio credit performance, partly offset by a reserve release from updates to its credit-loss estimation process.

The multifamily delinquency rate rose to 58 basis points at quarter-end from 51 basis points both a year earlier and in the second quarter. Whitlinger said the increase reflected stress associated with the elevated interest-rate environment. The multifamily mortgage portfolio totaled $510 billion, up 6% year over year.

Capital Position Continues to Build

Freddie Mac’s regulatory capital requirement totaled $162 billion at quarter-end, including $60 billion of stress and stability buffers. Retained earnings have increased available capital by $45 billion since the end of 2022, Whitlinger said.

Excluding buffers, the company’s capital shortfall was $98 billion at the end of the third quarter, largely because $73 billion of senior preferred stock does not qualify as regulatory capital.

Whitlinger said the company’s growing financial strength is intended to support liquidity through economic cycles, sustainable homeownership and a more efficient housing finance system.

About Freddie Mac (OTCMKTS:FMCC)

Freddie Mac, 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.

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