Freddie Mac net income balloons to $4.67B in Q3

by Francis Monfort06 Nov 2017
Freddie Mac reported net income of $4.67 billion for the third quarter, an increase of $3.00 billion from $1.66 billion in the second quarter and up $2.34 billion from $2.33 billion in the third quarter of 2016.

Comprehensive income for the quarter was $4.65 billion, increasing from both the $1.99 billion in the second quarter and the $2.31 billion in the year-ago period.

Freddie Mac said the increase in its earnings was primarily due to a $2.9 billion after-tax litigation settlement related to non-agency mortgage-related securities. Third-quarter earnings also benefited from market-related impacts of $0.6 billion after-tax primarily driven by a $0.4 billion benefit from credit spread tightening and a $0.2 billion benefit due to market gains from single-family legacy asset dispositions. These benefits were partially offset by $0.6 billion after-tax in provision for credit losses attributable to recent hurricane activity.

Freddie Mac also disclosed that it has provided liquidity of about $299 billion to the market in the nine months ended Sept. 30. This amount funded almost 1.1 million single-family homes and 530,000 multifamily rental units.

Also as of Sept. 30, Freddie Mac had a net worth amount of $5.3 billion and a capital reserve amount of $600 million in 2017. As a result, its dividend requirement to Treasury in December will be $4.7 billion. Freddie Mac would pay a dividend of that amount by December 31 upon a Federal Housing Finance Agency declaration.

“We clearly had a strong quarter – even excluding the large legal settlement, Freddie Mac made a profit of $1.8 billion,” Freddie Mac CEO Donald Layton said. “This reflects the growing strength of our business model as well as an improving quality of execution. And we’re doing this while increasingly protecting taxpayers through credit risk transfer, transacting greater volumes with more offerings than ever before – we recently reached a milestone of $1 trillion of mortgages with significant credit risk transferred.”


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