Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Federal Home Loan Mortgage Corp (FMCC, Financial) reported a net income of $3.1 billion for the third quarter, marking a 16% increase year-over-year.
- The company's net worth increased to $56 billion, representing a 26% increase year-over-year.
- FMCC helped 415,000 families purchase, refinance, or rent a home, with 51% of primary home purchases supporting first-time homebuyers.
- The multifamily segment reported a 47% increase in net income, driven by a benefit for credit losses and lower noninterest expense.
- The total mortgage portfolio grew 2% year-over-year, ending the quarter at $3.5 trillion, with strong credit characteristics and a low delinquency rate.
Negative Points
- Noninterest income decreased by $102 million due to lower investment gains compared to the prior year.
- The single-family serious delinquency rate increased by 4 basis points to 54 basis points this quarter.
- The multifamily delinquency rate increased by 1 basis point from last quarter and 15 basis points from the end of September 2023.
- The benefit for credit losses was lower this quarter compared to the prior year, driven by smaller credit reserve releases.
- The average estimated guaranteed fee rate charged on new business increased by 3 basis points from last quarter, potentially impacting affordability.
Q & A Highlights
Q: Can you elaborate on the factors driving the increase in net income for the third quarter?
A: Jim Whitlinger, Interim CFO, explained that the net income of $3.1 billion, a 16% increase year-over-year, was primarily driven by higher net interest income and a decline in noninterest expense. The increase in net interest income was due to lower expenses related to debt and hedge accounting relationships and continued mortgage portfolio growth.
Q: What measures is Freddie Mac taking to support affordable housing?
A: Jim Whitlinger highlighted that 51% of primary home purchases financed supported first-time homebuyers, and 51% of eligible purchase and refinance loans were affordable to low- and moderate-income families. Additionally, 94% of eligible rental units financed were affordable. Freddie Mac also introduced a policy framework for minimum lease standards in multifamily properties to enhance sustainability.
Q: How did the single-family segment perform this quarter?
A: The single-family segment reported a net income of $2.6 billion, up 11% from the prior year, driven by higher net interest income and lower noninterest expense. The segment saw a 2% increase in its mortgage portfolio, with strong credit characteristics and a slight increase in the serious delinquency rate.
Q: What were the key drivers for the multifamily segment's performance?
A: The multifamily segment's net income increased by 47% to $532 million, primarily due to a benefit for credit losses and lower noninterest expense. The segment experienced a slight pickup in demand for mortgage financing, with a 5% increase in the mortgage portfolio year-over-year.
Q: Could you provide insights into Freddie Mac's capital position?
A: Jim Whitlinger stated that Freddie Mac's net worth increased to $56 billion, representing a 26% increase year-over-year. This growth underscores the company's strong financial position and its commitment to fulfilling its mission of providing sustainable and affordable home financing.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
