8-K
Federal Home Loan Mortgage Corp (FMCC)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 10, 2022
Federal Home Loan Mortgage Corporation
(Exact name of registrant as specified in its charter)
Freddie Mac
| Federally chartered<br>corporation | 001-34139 | 52-0904874 | ||||
|---|---|---|---|---|---|---|
| (State or other jurisdiction of<br>incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) | 8200 Jones Branch Drive | 22102-3110 | ||
| --- | --- | --- | ||||
| McLean, | Virginia | |||||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (703) 903-2000
Not applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| None | N/A | N/A |
| Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | ||
| --- | --- | |
| Emerging growth company | ☐ | |
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Item 2.02. Results of Operations and Financial Condition.
On February 10, 2022, Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation) announced its results of operations for the year ended December 31, 2021. A copy of the related press release for the year ended December 31, 2021 is being filed as Exhibit 99.1 to this report and is incorporated herein by reference. In addition, a copy of the Fourth Quarter 2021 Financial Results Supplement is being furnished as Exhibit 99.2 to this report and is incorporated herein by reference.
Exhibit 99.1 submitted herewith shall be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.
Exhibit 99.2 submitted herewith shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of Section 18, nor shall it be deemed to be incorporated by reference into any disclosure document relating to Freddie Mac, except to the extent, if any, expressly set forth by specific reference in such document.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The exhibits listed in the Exhibit Index below are being filed or furnished as part of this Current Report on Form 8-K:
| Exhibit Number | Description of Exhibit |
|---|---|
| 99.1 | Press Release, dated February 10, 2022, issued by Freddie Mac |
| 99.2 | Fourth Quarter 2021 Financial Results Supplement |
| 104 | Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document |
| Freddie Mac Form 8-K | |
| --- |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FEDERAL HOME LOAN MORTGAGE CORPORATION | ||
|---|---|---|
| By: | /s/ | Christian M. Lown |
| Christian M. Lown | ||
| Executive Vice President - Chief Financial Officer |
Date: February 10, 2022
| Freddie Mac Form 8-K |
|---|
Document
| Exhibit 99.1 |
|---|
Freddie Mac Reports Net Income of $2.7 Billion for Fourth Quarter 2021
and $12.1 Billion for Full-Year 2021
Making Home Possible for Nearly Five Million Households in 2021
•Enabled 1.4 million families, including over 553,000 first-time homebuyers, to purchase a home and nearly 2.9 million homeowners to refinance into more favorable terms
•Financed 655,000 rental units, with 94% of eligible units being affordable to low- to moderate-income families
Fourth Quarter 2021 Financial Results
| Market Liquidity Provided -<br><br>$298 Billion | Homes and Rental Units Financed -<br><br>1.2 Million | Net Worth -<br><br>$28.0 Billion | Total Mortgage<br><br>Portfolio -<br><br>$3.2 Trillion |
|---|---|---|---|
| Consolidated | “In 2021, Freddie Mac made significant progress responsibly advancing our mission of making home possible, helping nearly five million families rent, buy, or refinance a home. The company continued to build financial strength by adding nearly $12 billion to retained earnings, improving our safety and soundness, and moving us closer to our capital target. We accomplished this while effectively managing our risks, which allows us to support our mission through the economic cycle and particularly in times of crisis. We begin 2022 with much to be proud of—and even more to accomplish in the year ahead.”<br><br><br><br>Michael J. DeVito<br><br>Chief Executive Officer | ||
| --- | --- | ||
| Net Revenues 5.6 BillionNet Income2.7 BillionComprehensive Income 2.7 Billion | |||
| Single-Family | |||
| Net Revenues 4.7 BillionNet Income 2.2 BillionComprehensive Income2.2 Billion | |||
| Multifamily | |||
| Net Revenues 0.9 BillionNet Income 0.5 BillionComprehensive Income0.5 Billion |
All values are in US Dollars.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 2
McLean, VA — Freddie Mac (OTCQB: FMCC) today reported net income of $2.7 billion for the fourth quarter of 2021, a decrease of 6% year-over-year, as higher net revenues were offset by an increase in credit-related expense. The company reported comprehensive income of $2.7 billion for the fourth quarter of 2021, an increase of 8% year-over-year.
Net revenues for the fourth quarter of 2021 increased 11% year-over-year to $5.6 billion, primarily driven by higher net interest income. Net interest income for the fourth quarter of 2021 increased 30% year-over-year to $4.8 billion, primarily driven by continued mortgage portfolio growth and higher average portfolio guarantee fee rates in Single-Family.
Credit-related expense for the fourth quarter of 2021 was $0.6 billion, compared to credit-related income of $0.1 billion in the fourth quarter of 2020. Credit-related expense for the fourth quarter of 2021 included a provision for credit losses of $0.1 billion. Credit-related income for the fourth quarter of 2020 included a benefit for credit losses of $0.8 billion, which was primarily driven by a reserve release due to realized house price appreciation.
Full-Year 2021 Financial Results
Freddie Mac reported net income of $12.1 billion for full-year 2021, an increase of 65% year-over-year, primarily driven by higher net revenues and a credit reserve release in Single-Family. The company reported comprehensive income of $11.6 billion for full-year 2021, an increase of 54% year-over-year.
Net revenues for full-year 2021 increased 32% year-over-year to $22.0 billion, primarily driven by higher net interest income and higher net investment gains. Net interest income for full-year 2021 increased 38% year-over-year to $17.6 billion, primarily driven by continued mortgage portfolio growth, higher average portfolio guarantee fee rates, and higher deferred fee income recognition in Single-Family. The increase in net investment gains for full-year 2021 was primarily due to higher gains on Multifamily securitization activities.
Credit-related expense for full-year 2021 decreased 56% year-over-year to $1.0 billion, driven by a reserve release due to realized house price appreciation and improving economic conditions throughout 2021, partially offset by a decrease in credit enhancement recoveries. Credit-related expense for full-year 2020 was primarily driven by the negative economic effects of the COVID-19 pandemic.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 3
Summary of Consolidated Statements of Comprehensive Income (Loss)
| (Dollars in millions) | 4Q 2021 | 3Q 2021 | Change | 4Q 2020 | Change | 2021 | 2020 |
|---|---|---|---|---|---|---|---|
| Net interest income | $4,756 | $4,418 | $338 | $3,653 | $1,103 | $17,580 | $12,771 |
| Guarantee income | 182 | 246 | (64) | 281 | (99) | 1,032 | 1,442 |
| Investment gains (losses), net | 519 | 383 | 136 | 856 | (337) | 2,746 | 1,813 |
| Other income (loss) | 108 | 200 | (92) | 232 | (124) | 593 | 633 |
| Net revenues | 5,565 | 5,247 | 318 | 5,022 | 543 | 21,951 | 16,659 |
| Benefit (provision) for credit losses | (138) | 243 | (381) | 813 | (951) | 1,041 | (1,452) |
| Other credit-related expense(1) | (466) | (437) | (29) | (722) | 256 | (2,072) | (884) |
| Credit-related income (expense) | (604) | (194) | (410) | 91 | (695) | (1,031) | (2,336) |
| Administrative expense | (734) | (627) | (107) | (706) | (28) | (2,651) | (2,535) |
| Legislated 10 basis point fee expense | (636) | (602) | (34) | (495) | (141) | (2,342) | (1,836) |
| Other expense | (156) | (178) | 22 | (243) | 87 | (728) | (723) |
| Operating expense | (1,526) | (1,407) | (119) | (1,444) | (82) | (5,721) | (5,094) |
| Income (loss) before income tax (expense) benefit | 3,435 | 3,646 | (211) | 3,669 | (234) | 15,199 | 9,229 |
| Income tax (expense) benefit | (691) | (727) | 36 | (756) | 65 | (3,090) | (1,903) |
| Net income (loss) | 2,744 | 2,919 | (175) | 2,913 | (169) | 12,109 | 7,326 |
| Other comprehensive income (loss), net of taxes and reclassification adjustments | (22) | (10) | (12) | (391) | 369 | (489) | 205 |
| Comprehensive income (loss) | $2,722 | $2,909 | $(187) | $2,522 | $200 | $11,620 | $7,531 |
| (1) Other credit-related expense includes credit enhancement expense, benefit for (decrease in) credit enhancement recoveries, and REO operations income (expense). | |||||||
| Conservatorship metrics <br>(in billions) | |||||||
| Net worth | $28.0 | $25.3 | $2.7 | $16.4 | $11.6 | $28.0 | $16.4 |
| Senior preferred stock liquidation preference | 98.0 | 95.0 | 2.9 | 86.5 | 11.4 | 98.0 | 86.5 |
| Remaining Treasury funding commitment | 140.2 | 140.2 | — | 140.2 | — | 140.2 | 140.2 |
| Cumulative dividend payments to Treasury | 119.7 | 119.7 | — | 119.7 | — | 119.7 | 119.7 |
| Cumulative draws from Treasury | 71.6 | 71.6 | — | 71.6 | — | 71.6 | 71.6 |
Totals may not add due to rounding.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 4
| Single-Family Segment |
|---|
| Financial Results |
Net Revenues
(In millions)
Net Income
(In millions)
Comprehensive Income
(In millions)
| (Dollars in millions) | 4Q 2021 | 3Q 2021 | Change | 4Q 2020 | Change | 2021 | 2020 |
|---|---|---|---|---|---|---|---|
| Net interest income | $4,425 | $4,080 | $345 | $3,349 | $1,076 | $16,273 | $11,592 |
| Non-interest income | 277 | (119) | 396 | 60 | 217 | 954 | 457 |
| Net revenues | 4,702 | 3,961 | 741 | 3,409 | 1,293 | 17,227 | 12,049 |
| Credit-related income (expense) | (605) | (177) | (428) | 80 | (685) | (1,086) | (2,200) |
| Operating expense | (1,343) | (1,251) | (92) | (1,288) | (55) | (5,070) | (4,543) |
| Income (loss) before income tax (expense) benefit | 2,754 | 2,533 | 221 | 2,201 | 553 | 11,071 | 5,306 |
| Income tax (expense) benefit | (555) | (505) | (50) | (454) | (101) | (2,251) | (1,094) |
| Net income (loss) | 2,199 | 2,028 | 171 | 1,747 | 452 | 8,820 | 4,212 |
| Total other comprehensive income (loss), net of taxes and reclassification adjustments | 5 | 18 | (13) | (374) | 379 | (379) | 104 |
| Comprehensive income (loss) | $2,204 | $2,046 | $158 | $1,373 | $831 | $8,441 | $4,316 |
Fourth Quarter 2021 Key Drivers
Net income and comprehensive income increased year-over-year, mainly driven by:
•Higher net interest income primarily due to continued mortgage portfolio growth and higher average portfolio guarantee fee rates, partially offset by
•Credit-related expense compared to credit-related income in the fourth quarter of 2020. Credit-related income in the fourth quarter of 2020 was primarily driven by a reserve release due to realized house price appreciation.
Full-Year 2021 Key Drivers
Net income and comprehensive income increased year-over-year, mainly driven by:
•Higher net interest income primarily due to continued mortgage portfolio growth, higher average portfolio guarantee fee rates, and higher deferred fee income recognition.
•Lower credit-related expense driven by a reserve release due to realized house price appreciation and improving economic conditions throughout 2021, partially offset by a decrease in credit enhancement recoveries. Credit-related expense in full-year 2020 was primarily driven by the negative economic effects of the COVID-19 pandemic.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 5
| Single-Family Segment |
|---|
| Business Results |
New Business Activity
(UPB in billions)
Mortgage Portfolio
(UPB in billions)
Serious Delinquency Rate
| 4Q 2021 | 3Q 2021 | Change | 4Q 2020 | Change | 2021 | 2020 | |
|---|---|---|---|---|---|---|---|
| New Business Statistics: | |||||||
| Average guarantee fee rate charged (bps) | 47 | 48 | (1) | 47 | — | 49 | 47 |
| Weighted average original loan-to-value (LTV) (%) | 71 | 72 | (1) | 70 | 1 | 71 | 71 |
| Weighted average original credit score | 748 | 750 | (2) | 761 | (13) | 753 | 759 |
| First-time homebuyers (%)(1) | 46 | 46 | — | 45 | 1 | 46 | 46 |
| Single-Family homes funded (in thousands) | 955 | 1,027 | (72) | 1,292 | (337) | 4,236 | 3,798 |
| Purchase borrowers (in thousands) | 357 | 415 | (58) | 356 | 1 | 1,378 | 1,131 |
| Refinance borrowers (in thousands) | 598 | 612 | (14) | 936 | (338) | 2,858 | 2,667 |
| UPB covered by new CRT issuance (in billions) | $242 | $167 | $75 | $167 | $75 | $828 | $477 |
| Portfolio Statistics: | |||||||
| Average guarantee fee rate charged (bps) | 46 | 46 | — | 44 | 2 | 46 | 44 |
| Weighted average current LTV (%) | 55 | 55 | — | 58 | (3) | 55 | 58 |
| Weighted average current credit score | 756 | 756 | — | 754 | 2 | 756 | 754 |
| Loan count (in millions) | 13.1 | 12.8 | 0.3 | 12.0 | 1.1 | 13.1 | 12.0 |
| Credit-Related Statistics: | |||||||
| Loan workout activity (in thousands) | 62 | 73 | (11) | 133 | (71) | 317 | 426 |
| Loans in forbearance, based on loan count (%) | 0.57 | 1.15 | (0.58) | 2.70 | (2.13) | 0.57 | 2.70 |
| Credit enhancement coverage (%) | 53 | 50 | 3 | 50 | 3 | 53 | 50 |
(1) First-time homebuyers as a percentage of purchase borrowers with loans secured by primary residences.
Business Highlights
•The company provided funding for approximately 1.0 million single-family loans, nearly 598,000 of which were refinance loans. First-time homebuyers represented 46% of new single-family home purchase loans.
•Single-Family loan workout activity decreased to 62,000 from 133,000 in the fourth quarter of 2020, as the demand for pandemic-related borrower assistance declined throughout 2021.
•0.57% of loans in the Single-Family mortgage portfolio, based on loan count, were in forbearance as of December 31, 2021, down from 2.70% in the fourth quarter of 2020. More than 858,000 forbearance plans have been initiated to help borrowers since January 1, 2020. As of December 31, 2021, approximately 791,000 of these loans have exited forbearance, including 330,000 through reinstatement or payoff and 374,000 through payment deferral.
•Credit enhancement coverage of the Single-Family mortgage portfolio increased to 53% from 50% in the fourth quarter of 2020, primarily due to the new business activity included in credit risk transfer (CRT) transactions.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 6
| Multifamily Segment |
|---|
| Financial Results |
Net Revenues
(In millions)
Net Income
(In millions)
Comprehensive Income
(In millions)
| (Dollars in millions) | 4Q 2021 | 3Q 2021 | Change | 4Q 2020 | Change | 2021 | 2020 |
|---|---|---|---|---|---|---|---|
| Net interest income | $331 | $338 | $(7) | $304 | $27 | $1,307 | $1,179 |
| Guarantee income | 147 | 266 | (119) | 251 | (104) | 918 | 1,330 |
| Investment gains (losses), net | 348 | 630 | (282) | 1,013 | (665) | 2,385 | 1,925 |
| Other income (loss) | 37 | 52 | (15) | 45 | (8) | 114 | 176 |
| Net revenues | 863 | 1,286 | (423) | 1,613 | (750) | 4,724 | 4,610 |
| Credit-related income (expense) | 1 | (17) | 18 | 11 | (10) | 55 | (136) |
| Operating expense | (183) | (156) | (27) | (156) | (27) | (651) | (551) |
| Income (loss) before income tax (expense) benefit | 681 | 1,113 | (432) | 1,468 | (787) | 4,128 | 3,923 |
| Income tax (expense) benefit | (136) | (222) | 86 | (302) | 166 | (839) | (809) |
| Net income (loss) | 545 | 891 | (346) | 1,166 | (621) | 3,289 | 3,114 |
| Total other comprehensive income (loss), net of taxes and reclassification adjustments | (27) | (28) | 1 | (17) | (10) | (110) | 101 |
| Comprehensive income (loss) | $518 | $863 | $(345) | $1,149 | $(631) | $3,179 | $3,215 |
Fourth Quarter 2021 Key Drivers
Net income and comprehensive income decreased year-over-year, mainly driven by:
•Lower guarantee income as continued growth in the Multifamily guarantee portfolio was offset by the impacts of adverse spread changes and loan prepayment activity on the fair values of guarantee assets.
•Lower net investment gains due to spread widening and a smaller volume of loan purchase and securitization activity.
Full-Year 2021 Key Drivers
Net income increased and comprehensive income decreased year-over-year, mainly driven by:
•Lower guarantee income as continued growth in the Multifamily guarantee portfolio was offset by the impacts of higher interest rates on the fair values of guarantee assets.
•Higher net investment gains primarily due to higher pricing margins for new loan purchases and greater spread tightening, partially offset by a smaller volume of new loan purchases as a result of a reduced Multifamily loan purchase cap in 2021.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 7
| Multifamily Segment |
|---|
| Business Results |
New Business Activity
(UPB in billions)
Mortgage Portfolio
(UPB in billions)
Delinquency Rate
| 4Q 2021 | 3Q 2021 | Change | 4Q 2020 | Change | 2021 | 2020 | |
|---|---|---|---|---|---|---|---|
| New Business Statistics: | |||||||
| Weighted average original LTV (%) | 67 | 67 | — | 70 | (3) | 68 | 69 |
| Weighted average original debt service coverage ratio | 1.33 | 1.35 | (0.02) | 1.38 | (0.05) | 1.35 | 1.40 |
| Number of rental units financed (in thousands) | 223 | 161 | 62 | 306 | (83) | 655 | 803 |
| Affordable ≤ 80% of AMI (% of eligible units acquired) | 57 | 68 | (11) | 71 | (14) | 69 | 71 |
| Affordable ≤ 120% of AMI (% of eligible units acquired) | 91 | 94 | (3) | 96 | (5) | 94 | 95 |
| UPB covered by new CRT issuance (in billions) | $23 | $18 | $5 | $26 | $(3) | $84 | $70 |
| Portfolio Statistics: | |||||||
| Average guarantee fee rate charged (bps) | 42 | 42 | — | 39 | 3 | 42 | 39 |
| Unit count (in thousands) | 4,652 | 4,624 | 28 | 4,598 | 54 | 4,652 | 4,598 |
| Credit-Related Statistics: | |||||||
| Loans in forbearance, based on UPB (%) | 0.42 | 0.46 | (0.04) | 2.01 | (1.59) | 0.42 | 2.01 |
| Credit enhancement coverage (%) | 94 | 94 | — | 89 | 5 | 94 | 89 |
Business Highlights
•The company provided financing for 223,000 multifamily rental units. 57% of eligible multifamily rental units financed were affordable to families earning at or below 80% of area median income (AMI).
•As of December 31, 2021, 0.42% of Multifamily mortgage portfolio loans, based on UPB, were in a COVID-19 forbearance program. 68.7% of these loans were included in securitizations with credit enhancement provided by subordination.
•Credit enhancement coverage of the Multifamily mortgage portfolio increased to 94% from 89% in the fourth quarter of 2020.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 8
About Freddie Mac’s Conservatorship
Since September 2008, Freddie Mac has been operating under conservatorship with FHFA as Conservator. The support provided by Treasury pursuant to the Purchase Agreement enables the company to maintain access to the debt markets and have adequate liquidity to conduct its normal business operations. The amount of funding available to Freddie Mac under the Purchase Agreement was $140.2 billion at December 31, 2021.
Pursuant to the Purchase Agreement, Freddie Mac will not be required to pay a dividend to Treasury on the senior preferred stock until it has built sufficient capital to meet the capital requirements and buffers set forth in the Enterprise Regulatory Capital Framework. As a result, the company was not required to pay a dividend to Treasury on the senior preferred stock in December 2021. As the company builds capital during this period, the quarterly increases in its Net Worth Amount have been, or will be, added to the aggregate liquidation preference of the senior preferred stock. The liquidation preference of the senior preferred stock increased to $98.0 billion on December 31, 2021 based on the $2.9 billion increase in the Net Worth Amount during the third quarter of 2021, and will increase to $100.7 billion on March 31, 2022 based on the $2.7 billion increase in the Net Worth Amount during the fourth quarter of 2021.
Additional Information
For more information, including information related to Freddie Mac’s financial results, conservatorship, and related matters, see the company’s Annual Report on Form 10-K for the year ended December 31, 2021 and the company’s Fourth Quarter 2021 Financial Results Supplement. These documents are available on the Investor Relations page of the company’s website at www.FreddieMac.com.
Additional information about Freddie Mac and its business is also set forth in the company’s other filings with the SEC, which are available on the Investor Relations page of the company’s website at www.FreddieMac.com and the SEC’s website at www.sec.gov. Freddie Mac encourages all investors and interested members of the public to review these materials for a more complete understanding of the company’s financial results and related disclosures.
Webcast Announcement
Management will host a conference call at 9 a.m. Eastern Time on February 10, 2022, to share the company’s results with the media. The conference call will be concurrently webcast. To access the audio webcast, use the following link: https://edge.media-server.com/mmc/p/995zhgex. The replay will be available on the company’s website at www.FreddieMac.com for approximately 30 days. All materials related to the call will be available on the Investor Relations page of the company’s website at www.FreddieMac.com.
| Media Contact: Frederick Solomon (703) 903-3861 | Investor Contact: Laurie Garthune (571) 382-4732 |
|---|
* * * *
This press release contains forward-looking statements, which may include statements pertaining to the conservatorship, the company’s current expectations and objectives for its Single-Family and Multifamily segments, its efforts to assist the housing market, liquidity and capital management, economic and market conditions and trends, the effects of the COVID-19 pandemic and actions taken in response thereto on its business, financial condition, and liquidity, its market share, the effect of legislative and regulatory developments and new accounting guidance, credit quality of loans the company owns or guarantees, the costs and benefits of the company’s CRT transactions, and results of operations and financial condition. Forward-looking statements involve known and unknown risks and uncertainties, some of which are beyond the company’s control. Management’s expectations for the company’s future necessarily involve a number of assumptions, judgments, and estimates, and various factors, including changes in market conditions, liquidity, mortgage spreads, credit outlook, uncertainty about the duration, severity, and effects of the COVID-19 pandemic and actions taken in response thereto, actions by the U.S. government (including FHFA, Treasury, and Congress) and state and local governments, and the impacts of legislation or regulations and new or amended accounting guidance, could cause actual results to differ materially from these expectations. These assumptions, judgments, estimates, and factors are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2021, which is available on the Investor Relations page of the company’s website at www.FreddieMac.com and the SEC’s website at www.sec.gov. The company undertakes no obligation to update forward-looking statements it makes to reflect events or circumstances occurring after the date of this press release.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 9
Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since its creation by Congress in 1970, the company has made housing more accessible and affordable for homebuyers and renters in communities nationwide. The company is building a better housing finance system for homebuyers, renters, lenders, and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog.
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 10
FREDDIE MAC
Consolidated Statements of Comprehensive Income (Loss)
| (In millions, except share-related amounts) | 4Q 2021 | 3Q 2021 | 4Q 2020 | 2021 | 2020 |
|---|---|---|---|---|---|
| Net interest income | |||||
| Interest income | $16,604 | $15,791 | $14,183 | $61,527 | $62,340 |
| Interest expense | (11,848) | (11,373) | (10,530) | (43,947) | (49,569) |
| Net interest income | 4,756 | 4,418 | 3,653 | 17,580 | 12,771 |
| Non-interest income (loss) | |||||
| Guarantee income | 182 | 246 | 281 | 1,032 | 1,442 |
| Investment gains (losses), net | 519 | 383 | 856 | 2,746 | 1,813 |
| Other income (loss) | 108 | 200 | 232 | 593 | 633 |
| Non-interest income (loss) | 809 | 829 | 1,369 | 4,371 | 3,888 |
| Net revenues | 5,565 | 5,247 | 5,022 | 21,951 | 16,659 |
| Benefit (provision) for credit losses | (138) | 243 | 813 | 1,041 | (1,452) |
| Non-interest expense | |||||
| Salaries and employee benefits | (356) | (352) | (342) | (1,398) | (1,344) |
| Other administrative expense | (378) | (275) | (364) | (1,253) | (1,191) |
| Total administrative expense | (734) | (627) | (706) | (2,651) | (2,535) |
| Credit enhancement expense | (428) | (386) | (327) | (1,518) | (1,058) |
| Benefit for (decrease in) credit enhancement recoveries | (32) | (60) | (385) | (542) | 323 |
| REO operations income (expense) | (6) | 9 | (10) | (12) | (149) |
| Legislated 10 basis point fee expense | (636) | (602) | (495) | (2,342) | (1,836) |
| Other expense | (156) | (178) | (243) | (728) | (723) |
| Non-interest expense | (1,992) | (1,844) | (2,166) | (7,793) | (5,978) |
| Income (loss) before income tax (expense) benefit | 3,435 | 3,646 | 3,669 | 15,199 | 9,229 |
| Income tax (expense) benefit | (691) | (727) | (756) | (3,090) | (1,903) |
| Net income (loss) | 2,744 | 2,919 | 2,913 | 12,109 | 7,326 |
| Other comprehensive income (loss), net of taxes and reclassification adjustments | (22) | (10) | (391) | (489) | 205 |
| Comprehensive income (loss) | $2,722 | $2,909 | $2,522 | $11,620 | $7,531 |
| Net income (loss) | $2,744 | $2,919 | $2,913 | $12,109 | $7,326 |
| Future increase in senior preferred stock liquidation preference | (2,722) | (2,909) | (2,522) | (11,620) | (7,291) |
| Net income (loss) attributable to common stockholders | $22 | $10 | $391 | $489 | $35 |
| Net income (loss) per common share | $0.01 | $0.00 | $0.12 | $0.15 | $0.01 |
| Weighted average common shares outstanding (in millions) | 3,234 | 3,234 | 3,234 | 3,234 | 3,234 |
Freddie Mac Fourth Quarter and Full-Year 2021 Financial Results
February 10, 2022
Page 11
FREDDIE MAC
Consolidated Balance Sheets
| December 31, | December 31, | |
|---|---|---|
| (In millions, except share-related amounts) | 2021 | 2020 |
| Assets | ||
| Cash and cash equivalents (includes $1,695 and $17,379 of restricted cash and cash equivalents) | $10,150 | $23,889 |
| Securities purchased under agreements to resell | 71,203 | 105,003 |
| Investment securities, at fair value | 53,015 | 59,825 |
| Mortgage loans held-for-sale (includes $10,498 and $14,199 at fair value) | 19,778 | 33,652 |
| Mortgage loans held-for-investment (net of allowance for credit losses of $4,947 and $5,732) | 2,828,331 | 2,350,236 |
| Accrued interest receivable | 7,474 | 7,754 |
| Deferred tax assets, net | 6,214 | 6,557 |
| Other assets (includes $6,594 and $6,980 at fair value) | 29,421 | 40,499 |
| Total assets | $3,025,586 | $2,627,415 |
| Liabilities and equity | ||
| Liabilities | ||
| Accrued interest payable | $6,268 | $6,210 |
| Debt (includes $2,478 and $2,592 at fair value) | 2,980,185 | 2,592,546 |
| Other liabilities (includes $287 and $958 at fair value) | 11,100 | 12,246 |
| Total liabilities | 2,997,553 | 2,611,002 |
| Commitments and contingencies | ||
| Equity | ||
| Senior preferred stock (liquidation preference of $97,959 and $86,539) | 72,648 | 72,648 |
| Preferred stock, at redemption value | 14,109 | 14,109 |
| Common stock, $0.00 par value, 4,000,000,000 shares authorized, 725,863,886 shares issued and 650,059,553 shares and 650,059,292 shares outstanding | — | — |
| Additional paid-in capital | — | — |
| Retained earnings (accumulated deficit) | (54,993) | (67,102) |
| AOCI, net of taxes, related to: | ||
| Available-for-sale securities | 297 | 810 |
| Other | (143) | (167) |
| Total AOCI, net of taxes | 154 | 643 |
| Treasury stock, at cost, 75,804,333 shares and 75,804,594 shares | (3,885) | (3,885) |
| Total equity | 28,033 | 16,413 |
| Total liabilities and equity | $3,025,586 | $2,627,415 |
| The table below presents the carrying value and classification of the assets and liabilities of consolidated variable interest entities (VIEs) on the company's consolidated balance sheets. | ||
| December 31, | December 31, | |
| (In millions) | 2021 | 2020 |
| Consolidated Balance Sheet Line Item | ||
| Assets: | ||
| Mortgage loans held-for-investment | $2,784,626 | $2,273,347 |
| All other assets | 54,300 | 83,982 |
| Total assets of consolidated VIEs | $2,838,926 | $2,357,329 |
| Liabilities: | ||
| Debt | $2,803,054 | $2,308,176 |
| All other liabilities | 5,823 | 5,610 |
| Total liabilities of consolidated VIEs | $2,808,877 | $2,313,786 |
a4q2021financialsuppleme
© Freddie Mac Fourth Quarter 2021 Financial Results Supplement February 10, 2022 Exhibit 99.2
© Freddie Mac 2 Financial Highlights $5.0 $5.3 $5.9 $5.2 $5.6 $2.9 $2.8 $3.7 $2.9 $2.7$2.5 $2.4 $3.6 $2.9 $2.7 Net revenues Net income Comprehensive income 4Q20 1Q21 2Q21 3Q21 4Q21 Net revenues, net income, and comprehensive income $ Billions ▪ Net income of $2.7 billion for the fourth quarter of 2021, a decrease of 6% year-over-year, as higher net revenues were offset by an increase in credit-related expense. The company also reported comprehensive income of $2.7 billion, an increase of 8% year-over-year. ▪ Net revenues for the fourth quarter of 2021 increased 11% year-over-year to $5.6 billion, primarily driven by continued mortgage portfolio growth and higher average portfolio guarantee fee rates.
© Freddie Mac 3 $2,714 $2,852 $2,962 $3,086 $3,207 $2,326 $2,458 $2,564 $2,682 $2,792 $388 $394 $398 $404 $415 Single-Family mortgage portfolio Multifamily mortgage portfolio 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 Total Portfolio Balances Mortgage portfolio1 UPB in $ Billions 18% YoY increase 7% YoY increase 20% YoY increase
© Freddie Mac 4 $28.0 $98.0 $140.2 Net worth Senior preferred stock liquidation preference Remaining Treasury funding commitment As of December 31, 2021 Conservatorship Matters Pursuant to the Purchase Agreement, Freddie Mac will not be required to pay a dividend to Treasury until it has built sufficient capital to meet the capital requirements and buffers set forth in the Enterprise Regulatory Capital Framework (ERCF). Draws and dividend payments $ Billions Net worth, liquidation preference2, and Treasury funding commitment $ Billions $71.6 $119.7 Cumulative draws from Treasury Cumulative dividend payments to Treasury As of December 31, 2021
© Freddie Mac 5 213,000 518,000 615,000 651,000 365,000 6.7% 6.0% 5.9% 4.7% 3.9% Average monthly net new jobs (non-farm) National unemployment rate (as of the last month in each quarter) 4Q20 1Q21 2Q21 3Q21 4Q21 National home prices increased by an average of 16.8% over the past year Quarterly ending interest rates 2.67% 3.17% 3.02% 3.01% 3.11% 0.93% 1.82% 1.44% 1.57% 1.57% 0.07% 0.01% 0.03% 0.05% 0.05% 30-year mortgage rate, based on Primary Mortgage Market Survey (PMMS) 10-year LIBOR SOFR 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 163 254 United States (Seasonally Adjusted) 2006 2009 2012 2015 2018 2021 Freddie Mac House Price Index (December 2000 = 100) National home prices since 2006 Unemployment rate and job creation Key Economic Indicators SOFR interest rates are 30-day average rates.
© Freddie Mac 6 $2,326 $2,458 $2,564 $2,682 $2,792 4Q20 1Q21 2Q21 3Q21 4Q21 1.01% 0.73% 0.73% 0.76% 0.81% 0.38% 0.27% 0.21% 0.20% 0.20% 2.64% 2.34% 1.86% 1.46% 1.12% One month past due Two months past due Seriously delinquent 4Q20 1Q21 2Q21 3Q21 4Q21 $383 $362 $288 $299 $271 $109 $89 $98 $132 $111 $274 $273 $190 $167 $160 47 50 49 48 47 Home purchase Refinance 4Q20 1Q21 2Q21 3Q21 4Q21 Single-Family Financial Highlights and Key Metrics $1,747 $1,738 $2,855 $2,028 $2,199 $1,373 $1,410 $2,781 $2,046 $2,204 Net income Comprehensive income 4Q20 1Q21 2Q21 3Q21 4Q21 Net income and comprehensive income $ Millions Guarantee fees charged on new acquisitions (bps)3 20% YoY increase Mortgage portfolio UPB in $ Billions Delinquency rates4 New business activity UPB in $ Billions
© Freddie Mac 7 70% 69% 71% 72% 71% 4Q20 1Q21 2Q21 3Q21 4Q21 28% 25% 34% 44% 41% 18% 20% 23% 26% 31% 54% 55% 43% 30% 28% Home purchase Cash-out refinance Other refinance 4Q20 1Q21 2Q21 3Q21 4Q21 761 759 754 750 748 4Q20 1Q21 2Q21 3Q21 4Q21 10% 10% 11% 12% 13% 4Q20 1Q21 2Q21 3Q21 4Q21 New business activity with debt-to-income ratio > 45% Weighted average original loan-to-value ratio (OLTV) Weighted average original credit score Single-Family Loan Purchase Credit Characteristics Loan purpose
© Freddie Mac 8 UPB covered by new CRT issuance $ Billions $167 $245 $174 $167 $242 4Q20 1Q21 2Q21 3Q21 4Q21 Mortgage portfolio with credit enhancement UPB in $ Billions $1,152 $1,230 $1,255 $1,345 $1,491 50% 50% 49% 50% 53% UPB Percentage 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 Single-Family Credit Risk Transfer
© Freddie Mac 9 $35 $14 $13 $18 $25 4Q20 1Q21 2Q21 3Q21 4Q21 0.16% 0.08% 0.27% 0.30% 1.95% 1.41% 0.10% 0.00% Freddie Mac (60+ day) FDIC insured institutions (90+ day) MF CMBS market (60+ day) ACLI investment bulletin (60+ day) 4Q20 1Q21 2Q21 3Q21 4Q21 Multifamily market and Freddie Mac delinquency rates5 $388 $394 $398 $404 $415 4,598 4,613 4,627 4,624 4,652 Mortgage portfolio Total unit count (in thousands) 4Q20 1Q21 2Q21 3Q21 4Q21 Multifamily Financial Highlights and Key Metrics Net income and comprehensive income $ Millions $1,166 $1,029 $824 $891 $545 $1,149 $968 $830 $863 $518 Net income Comprehensive income 4Q20 1Q21 2Q21 3Q21 4Q21 (89 %) New business activity $ Billions Mortgage portfolio UPB in $ Billions 7% YoY increase For 2021, the amounts for FDIC insured institutions and ACLI investment bulletin are as of September 30, 2021 (latest available information). Total new business activity for 2021 subject to the FHFA loan purchase cap of $70 billion.
© Freddie Mac 10 Acquisitions of units by area median income (AMI) (% of eligible units acquired) 33% 43% 43% 36% 25% 38% 34% 34% 32% 32% 25% 20% 20% 26% 34% 4% 3% 3% 6% 9% ≤60% >60% to ≤80% >80% to ≤120% >120% 4Q20 1Q21 2Q21 3Q21 4Q21 1.38 1.38 1.38 1.35 1.33 70% 69% 68% 67% 67% Weighted average ODSCR Weighted average OLTV ratio 4Q20 1Q21 2Q21 3Q21 4Q21 Multifamily New Business Characteristics (89 %) Weighted average original debt service coverage ratio (ODSCR) and weighted average OLTV ratio
© Freddie Mac 11 $346 $362 $373 $380 $389 89% 92% 94% 94% 94% UPB Percentage 12/31/20 03/31/21 06/30/21 09/30/21 12/31/21 Mortgage portfolio with credit enhancement UPB in $ Billions $26 $26 $17 $18 $23 4Q20 1Q21 2Q21 3Q21 4Q21 Multifamily Credit Risk Transfer UPB covered by new CRT Issuance $ Billions
© Freddie Mac 12 52 38 27 21 16 74 50 55 45 39 7 6 6 7 7 Forbearance agreements Payment deferral plans Other 4Q20 1Q21 2Q21 3Q21 4Q21 Number of families Freddie Mac helped to own or rent a home6 In Thousands Housing Market Support 1,598 1,365 1,160 1,188 1,178 936 940 708 612 598 356 291 315 415 357 306 134 137 161 223 Single-Family refinance borrowers Single-Family home purchase borrowers Multifamily rental units 4Q20 1Q21 2Q21 3Q21 4Q21 Other includes repayment plans, loan modifications, and foreclosure alternatives. 8 Number of Single-Family loan workouts7 In Thousands 8 8
© Freddie Mac 13 Endnotes 1 Based on unpaid principal balances (UPB) of securitized mortgage loans, unsecuritized mortgage loans, and other, which primarily consists of other mortgage-related guarantees. 2 Includes the initial $1 billion liquidation preference of the senior preferred stock issued to Treasury in September 2008, the $71.6 billion of draws from Treasury, and the $25.3 billion in increases to our Net Worth Amount pursuant to the Purchase Agreement. 3 Represents the estimated average rate of guarantee fees for new acquisitions during the period assuming amortization of upfront fees using the estimated life of the related loans rather than the original contractual maturity date of the related loans. Net of legislated 10 basis point fee remitted to Treasury pursuant to the Temporary Payroll Tax Cut Continuation Act of 2011 as extended by the Infrastructure Investment and Jobs Act. 4 Single-family loans in forbearance are reported as delinquent during the forbearance period to the extent that payments are past due based on the loan's original contractual terms, irrespective of the forbearance agreement. 5 Multifamily loans in forbearance are reported as current as long as the borrower is in compliance with the forbearance agreement, including the agreed upon repayment plan. Loans in forbearance are therefore not included in the multifamily delinquency rates if the borrower is in compliance with the forbearance agreement. 6 Based on the company’s purchases of loans and issuances of mortgage-related securities. For the periods presented, a borrower may be counted more than once if the company purchased more than one loan (purchase or refinance mortgage) relating to the same borrower. 7 Consists of both home retention actions and foreclosure alternatives. 8 Categories are not mutually exclusive, and a borrower in one category may also be included in another category in the same or another period. For example, a borrower helped through a home retention action in one period may subsequently lose his or her home through a foreclosure alternative in a later period.
© Freddie Mac 14 Safe Harbor Statements Freddie Mac obligations Freddie Mac’s securities are obligations of Freddie Mac only. The securities, including any interest or return of discount on the securities, are not guaranteed by and are not debts or obligations of the United States or any federal agency or instrumentality other than Freddie Mac. No offer or solicitation of securities This presentation includes information related to, or referenced in the offering documentation for, certain Freddie Mac securities, including offering circulars and related supplements and agreements. Freddie Mac securities may not be eligible for offer or sale in certain jurisdictions or to certain persons. This information is provided for your general information only, is current only as of its specified date and does not constitute an offer to sell or a solicitation of an offer to buy securities. The information does not constitute a sufficient basis for making a decision with respect to the purchase or sale of any security. All information regarding or relating to Freddie Mac securities is qualified in its entirety by the relevant offering circular and any related supplements. Investors should review the relevant offering circular and any related supplements before making a decision with respect to the purchase or sale of any security. In addition, before purchasing any security, please consult your legal and financial advisors for information about and analysis of the security, its risks and its suitability as an investment in your particular circumstances. Forward-looking statements Freddie Mac's presentations may contain forward-looking statements, which may include statements pertaining to the conservatorship, the company’s current expectations and objectives for its Single-family and Multifamily segments, its efforts to assist the housing market, liquidity and capital management, economic and market conditions and trends, the effects of the COVID-19 pandemic and actions taken in response thereto on its business, financial condition, and liquidity, its market share, the effect of legislative and regulatory developments and new accounting guidance, credit quality of loans the company owns or guarantees, the costs and benefits of the company’s credit risk transfer transactions, and results of operations and financial condition. Forward-looking statements involve known and unknown risks and uncertainties, some of which are beyond the company’s control. Management’s expectations for the company’s future necessarily involve a number of assumptions, judgments, and estimates, and various factors, including changes in market conditions, liquidity, mortgage spreads, credit outlook, actions by the U.S. government (including FHFA, Treasury, and Congress) and state and local governments, and the impacts of legislation or regulations and new or amended accounting guidance, could cause actual results to differ materially from these expectations. These assumptions, judgments, estimates and factors are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2021, which is available on the Investor Relations page of the company’s website at www.freddiemac.com and the SEC’s website at www.sec.gov. The company undertakes no obligation to update forward-looking statements it makes to reflect events or circumstances occurring after the date of this presentation.