FMCC 8-K
Federal Home Loan Mortgage Corp (FMCC)
8-K
2021-04-29
For: 2021-04-29
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Added on
April 05, 2026
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): April 29, 2021
(Exact name of registrant as specified in its charter)
Freddie Mac
| Federally chartered corporation | ||||||||||||||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (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 April 29, 2021, Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation) announced its results of operations for the quarter ended March 31, 2021. A copy of the related press release for the quarter ended March 31, 2021 is being filed as Exhibit 99.1 to this report and is incorporated herein by reference. In addition, a copy of the First 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 | ||||||||
| 99.2 | ||||||||
| 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: April 29, 2021
__________________________________________________________________________________________________________
Freddie Mac Form 8-K
 |  | |||||||
Exhibit 99.1 | ||||||||
Freddie Mac Reports Net Income of $2.8 Billion and
Comprehensive Income of $2.4 Billion for First Quarter 2021
Providing Stability to the Housing Market While Serving Freddie Mac's Affordable Housing Mission
•Continued to provide mortgage-relief options for borrowers affected by the COVID-19 pandemic, including forbearance programs for both single-family and multifamily borrowers.
•Extended moratorium on foreclosures and evictions until at least June 30, 2021.
•Extended temporary measures designed to provide flexibility to homeowners, lenders, and appraisers to expedite loan closings during the pandemic.
First Quarter 2021 Financial Results
Market Liquidity Provided - $377 Billion | Homes and Rental Units Financed - 1.4 Million | Net Worth - $18.8 Billion | Total Mortgage Portfolio - $2.9 Trillion | |||||||||||||||||
| Consolidated | •Net income up $2.6 billion year-over-year, driven by mortgage portfolio growth, higher deferred fee income recognition, higher revenues from Multifamily loan purchase and securitization activities, and lower credit-related expense •Benefit for credit losses of $0.2 billion, reflecting a credit reserve release driven by improving economic conditions •New business activity of $362 billion, up 162% year-over-year, reflecting strong home purchase and refinance activity •Mortgage portfolio of $2,458 billion, up 22% year-over-year, driven by strong new business activity •Serious delinquency rate of 2.34%, up from 0.60% at March 31, 2020, driven by loans in COVID-19 forbearance, and down from 2.64% at December 31, 2020 •Completed nearly 94,000 loan workouts •51% of mortgage portfolio covered by credit enhancements •New business activity of $14 billion, up 40% year-over-year, driven by the low interest rate environment •Mortgage portfolio of $394 billion, up 15% year-over-year, driven by strong loan purchase and securitization activity •Delinquency rate, which does not include loans in forbearance, increased to 0.17%, up from 0.08% at March 31, 2020 •92% of mortgage portfolio covered by credit enhancements | “Freddie Mac continued to support homebuyers and renters, providing $377 billion of liquidity for home purchases, refinancings, and the multifamily market in the first quarter of 2021. We have also helped hundreds of thousands of families stay in their homes through our foreclosure and eviction prevention programs. We are proud of our role in maintaining a vibrant housing market while providing critical assistance to borrowers and lenders during the pandemic.” Christian M. Lown Chief Financial Officer | ||||||||||||
Net Revenues $5.3 Billion Net Income $2.8 Billion Comprehensive Income $2.4 Billion | ||||||||||||||
Single-Family | ||||||||||||||
Net Revenues $3.8 Billion Net Income $1.7 Billion Comprehensive Income $1.4 Billion | ||||||||||||||
Multifamily | ||||||||||||||
Net Revenues $1.4 Billion Net Income $1.0 Billion Comprehensive Income $1.0 Billion | ||||||||||||||
Totals may not add due to rounding.
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
Page 2
McLean, VA — Freddie Mac (OTCQB: FMCC) today reported net income of $2.8 billion for the first quarter of 2021, an increase of $2.6 billion year-over-year, primarily driven by higher net revenues and lower credit-related expense. The company also reported comprehensive income of $2.4 billion for the first quarter of 2021, an increase of $1.8 billion year-over-year.
Net revenues increased 118% year-over-year to $5.3 billion, primarily driven by higher net interest income and higher net investment gains. Net interest income increased 31% year-over-year to $3.6 billion, primarily driven by growth in the Single-Family mortgage portfolio and higher deferred fee income recognition due to faster loan prepayments as a result of the low mortgage interest rate environment. Net investment gains were $1.2 billion, compared to net investment losses of $0.8 billion for the first quarter of 2020. This change was primarily driven by higher revenues from Multifamily loan purchase and securitization activities, while the first quarter of 2020 included significant spread-related losses as a result of the market volatility caused by the pandemic.
Credit-related expense declined 63% year-over-year to $0.4 billion, driven by improving economic conditions. Credit-related expense in the first quarter of 2020 was primarily driven by the negative economic effects of the pandemic.
Summary of Condensed Consolidated Statements of Comprehensive Income (Loss)
| (Dollars in millions) | 1Q 2021 | 4Q 2020 | Change | 1Q 2020 | Change | ||||||||||||||||||||||||||||||
| Net interest income | $3,639 | $3,653 | $(14) | $2,785 | $854 | ||||||||||||||||||||||||||||||
| Guarantee fee income | 248 | 281 | (33) | 377 | (129) | ||||||||||||||||||||||||||||||
| Investment gains (losses), net | 1,208 | 856 | 352 | (835) | 2,043 | ||||||||||||||||||||||||||||||
| Other income (loss) | 178 | 232 | (54) | 95 | 83 | ||||||||||||||||||||||||||||||
| Net revenues | 5,273 | 5,022 | 251 | 2,422 | 2,851 | ||||||||||||||||||||||||||||||
| Benefit (provision) for credit losses | 196 | 813 | (617) | (1,233) | 1,429 | ||||||||||||||||||||||||||||||
| Credit enhancement expense | (335) | (327) | (8) | (231) | (104) | ||||||||||||||||||||||||||||||
| Benefit for (decrease in) credit enhancement recoveries | (257) | (385) | 128 | 467 | (724) | ||||||||||||||||||||||||||||||
| Real estate owned (REO) operations expense | (8) | (10) | 2 | (85) | 77 | ||||||||||||||||||||||||||||||
| Credit-related expense | (404) | 91 | (495) | (1,082) | 678 | ||||||||||||||||||||||||||||||
| Administrative expense | (639) | (706) | 67 | (587) | (52) | ||||||||||||||||||||||||||||||
| Temporary Payroll Tax Cut Continuation Act of 2011 expense | (534) | (495) | (39) | (432) | (102) | ||||||||||||||||||||||||||||||
| Other expense | (215) | (243) | 28 | (103) | (112) | ||||||||||||||||||||||||||||||
| Operating expense | (1,388) | (1,444) | 56 | (1,122) | (266) | ||||||||||||||||||||||||||||||
| Income (loss) before income tax (expense) benefit | 3,481 | 3,669 | (188) | 218 | 3,263 | ||||||||||||||||||||||||||||||
| Income tax (expense) benefit | (714) | (756) | 42 | (45) | (669) | ||||||||||||||||||||||||||||||
| Net income (loss) | 2,767 | 2,913 | (146) | 173 | 2,594 | ||||||||||||||||||||||||||||||
| Total other comprehensive income (loss), net of taxes and reclassification adjustments | (389) | (391) | 2 | 449 | (838) | ||||||||||||||||||||||||||||||
| Comprehensive income (loss) | $2,378 | $2,522 | $(144) | $622 | $1,756 | ||||||||||||||||||||||||||||||
| Conservatorship metrics (in billions) | |||||||||||||||||||||||||||||||||||
| Net worth | $18.8 | $16.4 | $2.4 | $9.5 | $9.3 | ||||||||||||||||||||||||||||||
| Senior preferred stock liquidation preference | 89.1 | 86.5 | 2.5 | 81.8 | 7.3 | ||||||||||||||||||||||||||||||
| Remaining Treasury funding commitment | 140.2 | 140.2 | — | 140.2 | — | ||||||||||||||||||||||||||||||
| Cumulative dividend payments to Treasury | 119.7 | 119.7 | — | 119.7 | — | ||||||||||||||||||||||||||||||
| Cumulative draws from Treasury | 71.6 | 71.6 | — | 71.6 | — | ||||||||||||||||||||||||||||||
Totals may not add due to rounding.
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
Page 3
Segment Financial Results and Business Highlights
During the first quarter of 2021, Freddie Mac's chief operating decision maker began making decisions about allocating resources and assessing segment performance based on two reportable segments – Single-Family and Multifamily. In prior periods, the company managed its business based on three reportable segments – Single-Family Guarantee, Multifamily, and Capital Markets. In connection with this change, the company has also changed the measure of segment profit and loss for each segment to be based on segment net income and comprehensive income calculated using the same accounting policies the company uses to prepare its general purpose financial statements in conformity with generally accepted accounting principles. The financial results of each reportable segment include directly attributable revenue and expenses. The company allocates interest expense and other debt funding and hedging-related costs to each reportable segment using a funds transfer pricing process. The company fully allocates to each reportable segment the administrative expenses and other centrally-incurred costs that are not directly attributable to a particular segment using various methodologies depending on the nature of the expense. As a result, the sum of each income statement line item for the two reportable segments is equal to that same income statement line item for the consolidated entity. The company has discontinued the reclassifications of certain activities between various line items that were included in its previous measure of segment profit and loss. As a result, the company has also discontinued the use of Segment Earnings and therefore no longer presents net interest income, net interest yield, and guarantee fee income on an "adjusted," or non-GAAP, basis.
Prior period information has been revised to conform to the current period presentation. For more information about the company's reportable segments, see Note 15 to the financial statements included in the company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
Page 4
| Single-Family Segment | ||
| Financial Results | ||
Net Revenues
(In millions)
Net Income
(In millions)
Comprehensive Income
(In millions)
| (Dollars in millions) | 1Q 2021 | 4Q 2020 | Change | 1Q 2020 | Change | |||||||||||||||||||||||||||
| Net interest income | $3,308 | $3,350 | $(42) | $2,485 | $823 | |||||||||||||||||||||||||||
| Guarantee fee income | 89 | 30 | 59 | (13) | 102 | |||||||||||||||||||||||||||
| Investment gains (losses), net | 300 | (158) | 458 | 24 | 276 | |||||||||||||||||||||||||||
| Other income (loss) | 152 | 187 | (35) | 58 | 94 | |||||||||||||||||||||||||||
| Net revenues | 3,849 | 3,409 | 440 | 2,554 | 1,295 | |||||||||||||||||||||||||||
| Benefit (provision) for credit losses | 146 | 790 | (644) | (1,166) | 1,312 | |||||||||||||||||||||||||||
| Credit enhancement expense | (325) | (321) | (4) | (227) | (98) | |||||||||||||||||||||||||||
| Benefit for (decrease in) credit enhancement recoveries | (245) | (379) | 134 | 439 | (684) | |||||||||||||||||||||||||||
| REO operations expense | (8) | (10) | 2 | (85) | 77 | |||||||||||||||||||||||||||
| Credit-related expense | (432) | 80 | (512) | (1,039) | 607 | |||||||||||||||||||||||||||
| Administrative expense | (488) | (564) | 76 | (467) | (21) | |||||||||||||||||||||||||||
| Temporary Payroll Tax Cut Continuation Act of 2011 Expense | (534) | (495) | (39) | (432) | (102) | |||||||||||||||||||||||||||
| Other expense | (209) | (229) | 20 | (98) | (111) | |||||||||||||||||||||||||||
| Operating expense | (1,231) | (1,288) | 57 | (997) | (234) | |||||||||||||||||||||||||||
| Income (loss) before income tax (expense) benefit | 2,186 | 2,201 | (15) | 518 | 1,668 | |||||||||||||||||||||||||||
| Income tax (expense) benefit | (448) | (454) | 6 | (107) | (341) | |||||||||||||||||||||||||||
| Net income (loss) | 1,738 | 1,747 | (9) | 411 | 1,327 | |||||||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | (328) | (374) | 46 | 385 | (713) | |||||||||||||||||||||||||||
| Comprehensive income (loss) | $1,410 | $1,373 | $37 | $796 | $614 | |||||||||||||||||||||||||||
Key Drivers
Net income and comprehensive income increased year-over-year, primarily driven by:
•Higher net interest income primarily due to mortgage portfolio growth and higher deferred fee income recognition, which was driven by a higher deferred fee balance and faster loan prepayments as a result of the low mortgage interest rate environment; and
•Lower credit-related expense primarily driven by a benefit for credit losses as a result of improving economic conditions in the first quarter of 2021, partially offset by a decrease in credit enhancement recoveries. Credit-related expense in the first quarter of 2020 was primarily driven by the negative economic effects of the pandemic.
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
Page 5
| Single-Family Segment | ||
| Business Results | ||
New Business Activity
(UPB in billions)
Mortgage Portfolio
(UPB in billions)
Serious Delinquency Rate
| 1Q 2021 | 4Q 2020 | Change | 1Q 2020 | Change | ||||||||||||||||||||||||||||
| New Business Statistics: | ||||||||||||||||||||||||||||||||
| Average guarantee fee rate charged (bps) | 50 | 47 | 3 | 49 | 1 | |||||||||||||||||||||||||||
| Weighted average original loan-to-value (LTV) (%) | 69 | 70 | (1) | 74 | (5) | |||||||||||||||||||||||||||
| Weighted average original credit score | 759 | 761 | (2) | 752 | 7 | |||||||||||||||||||||||||||
| First-time homebuyers (% of home purchase loans) | 46 | 45 | 1 | 47 | (1) | |||||||||||||||||||||||||||
| Single-Family homes funded (in thousands) | 1,231 | 1,292 | (61) | 526 | 705 | |||||||||||||||||||||||||||
| Purchase borrowers (in thousands) | 291 | 356 | (65) | 217 | 74 | |||||||||||||||||||||||||||
| Refinance borrowers (in thousands) | 940 | 936 | 4 | 309 | 631 | |||||||||||||||||||||||||||
| CRT issuance protected UPB (in billions) | $245 | $167 | $78 | $141 | $104 | |||||||||||||||||||||||||||
| Portfolio Statistics: | ||||||||||||||||||||||||||||||||
| Average guarantee fee rate charged (bps) | 45 | 44 | 1 | 41 | 4 | |||||||||||||||||||||||||||
| Weighted average current LTV (%) | 58 | 58 | — | 58 | — | |||||||||||||||||||||||||||
| Weighted average current credit score | 754 | 754 | — | 748 | 6 | |||||||||||||||||||||||||||
| Loan count (in millions) | 12 | 12 | — | 11 | 1 | |||||||||||||||||||||||||||
| Credit-Related Statistics: | ||||||||||||||||||||||||||||||||
| Loan workout activity (in thousands) | 94 | 133 | (39) | 11 | 83 | |||||||||||||||||||||||||||
| Loans in forbearance, based on loan count (%) | 2.19 | 2.70 | (0.51) | 0.14 | 2.05 | |||||||||||||||||||||||||||
| Current (%) | 0.32 | 0.37 | (0.05) | NM | NM | |||||||||||||||||||||||||||
| Past due (%) | 1.87 | 2.33 | (0.46) | NM | NM | |||||||||||||||||||||||||||
| Credit enhancement coverage (%) | 51 | 51 | — | 58 | (7) | |||||||||||||||||||||||||||
NM - not meaningful.
Business Highlights
•The company provided funding for 1.2 million single-family homes, nearly 940,000 of which were refinance loans. First-time homebuyers represented 46% of new single-family purchase loans.
•Single-Family loan workout activity increased to 94,000, from 11,000 in the first quarter of 2020, driven by completed forbearance agreements and payment deferrals primarily related to the COVID-19 pandemic.
•2.19% of loans in the Single-Family mortgage portfolio, based on loan count, were in forbearance as of March 31, 2021.
•Credit enhancement coverage of the Single-Family mortgage portfolio decreased to 51% from 58% in the first quarter of 2020, primarily due to a higher proportion of recently acquired loans with lower LTV ratios and the high volume of new business activity which has not been included in credit risk transfer (CRT) transactions yet, but may be included in future periods.
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
Page 6
| Multifamily Segment | ||
| Financial Results | ||
Net Revenues
(In millions)
Net Income
(In millions)
Comprehensive Income
(In millions)
| (Dollars in millions) | 1Q 2021 | 4Q 2020 | Change | 1Q 2020 | Change | |||||||||||||||||||||||||||
| Net interest income | $331 | $303 | $28 | $300 | $31 | |||||||||||||||||||||||||||
| Guarantee fee income | 159 | 251 | (92) | 390 | (231) | |||||||||||||||||||||||||||
| Investment gains (losses), net | 908 | 1,014 | (106) | (859) | 1,767 | |||||||||||||||||||||||||||
| Other income (loss) | 26 | 45 | (19) | 37 | (11) | |||||||||||||||||||||||||||
| Net revenues | 1,424 | 1,613 | (189) | (132) | 1,556 | |||||||||||||||||||||||||||
| Credit-related expense | 28 | 11 | 17 | (43) | 71 | |||||||||||||||||||||||||||
| Administrative expense | (151) | (142) | (9) | (120) | (31) | |||||||||||||||||||||||||||
| Other expense | (6) | (14) | 8 | (5) | (1) | |||||||||||||||||||||||||||
| Operating expense | (157) | (156) | (1) | (125) | (32) | |||||||||||||||||||||||||||
| Income (loss) before income tax (expense) benefit | 1,295 | 1,468 | (173) | (300) | 1,595 | |||||||||||||||||||||||||||
| Income tax (expense) benefit | (266) | (302) | 36 | 62 | (328) | |||||||||||||||||||||||||||
| Net income (loss) | 1,029 | 1,166 | (137) | (238) | 1,267 | |||||||||||||||||||||||||||
| Total other comprehensive income (loss), net of tax | (61) | (17) | (44) | 64 | (125) | |||||||||||||||||||||||||||
| Comprehensive income (loss) | $968 | $1,149 | $(181) | $(174) | $1,142 | |||||||||||||||||||||||||||
Key Drivers
Net income and comprehensive income, compared to a net loss and comprehensive loss in the first quarter of 2020, mainly driven by:
•Net investment gains, compared to net investment losses in the first quarter of 2020, primarily due to tighter spreads and higher margins on Multifamily loan commitments in the first quarter of 2021, while the first quarter of 2020 included significant spread-related losses as a result of the market volatility caused by the pandemic, partially offset by
•Lower guarantee fee income as continued growth in the Multifamily guarantee portfolio was more than offset by higher fair value losses on the guarantee assets as a result of an increase in interest rates in the first quarter of 2021. As most multifamily loans are not prepayable without penalty, increases in interest rates generally result in lower Multifamily guarantee asset fair values.
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
Page 7
| Multifamily Segment | ||
| Business Results | ||
New Business Activity
(UPB in billions)
Mortgage Portfolio
(UPB in billions)
Delinquency Rate
| 1Q 2021 | 4Q 2020 | Change | 1Q 2020 | Change | ||||||||||||||||||||||||||||
| New Business Statistics: | ||||||||||||||||||||||||||||||||
| Weighted average original LTV (%) | 69 | 70 | (1) | 69 | — | |||||||||||||||||||||||||||
| Weighted average original debt service coverage ratio | 1.38 | 1.38 | — | 1.42 | (0.04) | |||||||||||||||||||||||||||
| Number of rental units financed (in thousands) | 134 | 306 | (172) | 111 | 23 | |||||||||||||||||||||||||||
| Affordable ≤ 80% of AMI (% of eligible units acquired) | 77 | 71 | 6 | 72 | 5 | |||||||||||||||||||||||||||
| Affordable ≤ 120% of AMI (% of eligible units acquired) | 97 | 96 | 1 | 96 | 1 | |||||||||||||||||||||||||||
| Securitization and Guarantee Activity Statistics: | ||||||||||||||||||||||||||||||||
| Average guarantee fee rate charged (bps) | 49 | 51 | (2) | 46 | 3 | |||||||||||||||||||||||||||
| Total securitization and guarantee activity (in billions) | $23 | $28 | $(5) | $13 | $10 | |||||||||||||||||||||||||||
| Guaranteed securities and other mortgage-related guarantees (in billions) | $21 | $26 | $(5) | $12 | $9 | |||||||||||||||||||||||||||
| Unguaranteed subordinated securities (in billions) | $2 | $2 | $— | $1 | $1 | |||||||||||||||||||||||||||
| Portfolio Statistics: | ||||||||||||||||||||||||||||||||
| Average guarantee fee rate charged (bps) | 41 | 39 | 2 | 37 | 4 | |||||||||||||||||||||||||||
| Loan count (in thousands) | 30 | 29 | 1 | 27 | 3 | |||||||||||||||||||||||||||
| Unit count (in thousands) | 4,613 | 4,598 | 15 | 4,286 | 327 | |||||||||||||||||||||||||||
| Credit-Related Statistics: | ||||||||||||||||||||||||||||||||
| Loans in forbearance, based on UPB (%) | 1.88 | 2.01 | (0.13) | — | 1.88 | |||||||||||||||||||||||||||
| Loans in forbearance period (%) | 0.06 | 0.10 | (0.04) | — | 0.06 | |||||||||||||||||||||||||||
| Loans in repayment period (%) | 1.82 | 1.91 | (0.09) | — | 1.82 | |||||||||||||||||||||||||||
| Credit enhancement coverage (%) | 92 | 89 | 3 | 91 | 1 | |||||||||||||||||||||||||||
Business Highlights
•The company provided financing for more than 134,000 multifamily rental units. 77% of the eligible multifamily rental units financed were affordable to families earning at or below 80% of area median income (AMI).
•As of March 31, 2021, 1.88% of the loans in the Multifamily mortgage portfolio, based on UPB, were in a forbearance program, and approximately 97% of these loans were in the repayment period. Approximately 85% of the total loans in a Multifamily forbearance program are included in securitizations with credit enhancement provided by subordination.
•Credit enhancement coverage of the Multifamily mortgage portfolio increased to 92% from 91% in the first quarter of 2020.
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
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 March 31, 2021.
Due to changes to the terms of the senior preferred stock pursuant to the January 2021 Letter Agreement, the company 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). As a result, the company was not required to pay a dividend to Treasury on the senior preferred stock in March 2021. As the company builds capital during this period, the quarterly increases in its Net Worth Amount have been, and will continue to be, added to the aggregate liquidation preference of the senior preferred stock. The liquidation preference of the senior preferred stock increased to $89.1 billion on March 31, 2021 based on the $2.5 billion increase in the Net Worth Amount during the fourth quarter of 2020, and will increase to $91.4 billion on June 30, 2021 based on the $2.4 billion increase in the Net Worth Amount during the first quarter of 2021.
For additional information on the Purchase Agreement, January 2021 Letter Agreement, senior preferred stock, and ERCF, see the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.
Additional Information
For more information, including information related to Freddie Mac’s financial results, conservatorship, and related matters, see the company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and the company’s First 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 April 29, 2021 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/i9nxu6fw. 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, which is
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
Page 9
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 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 First Quarter 2021 Financial Results
April 29, 2021
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FREDDIE MAC
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(In millions, except share-related amounts) | 1Q 2021 | 4Q 2020 | 1Q 2020 | |||||||||||||||||
| Net interest income | ||||||||||||||||||||
| Interest income | $13,902 | $14,183 | $17,592 | |||||||||||||||||
| Interest expense | (10,263) | (10,530) | (14,807) | |||||||||||||||||
| Net interest income | 3,639 | 3,653 | 2,785 | |||||||||||||||||
| Non-interest income (loss) | ||||||||||||||||||||
| Guarantee fee income | 248 | 281 | 377 | |||||||||||||||||
| Investment gains (losses), net | 1,208 | 856 | (835) | |||||||||||||||||
| Other income (loss) | 178 | 232 | 95 | |||||||||||||||||
| Non-interest income (loss) | 1,634 | 1,369 | (363) | |||||||||||||||||
| Net revenues | 5,273 | 5,022 | 2,422 | |||||||||||||||||
| Benefit (provision) for credit losses | 196 | 813 | (1,233) | |||||||||||||||||
| Non-interest expense | ||||||||||||||||||||
| Salaries and employee benefits | (344) | (342) | (341) | |||||||||||||||||
| Professional services | (87) | (129) | (76) | |||||||||||||||||
| Other administrative expense | (208) | (235) | (170) | |||||||||||||||||
| Total administrative expense | (639) | (706) | (587) | |||||||||||||||||
| Credit enhancement expense | (335) | (327) | (231) | |||||||||||||||||
| Benefit for (decrease in) credit enhancement recoveries | (257) | (385) | 467 | |||||||||||||||||
| REO operations expense | (8) | (10) | (85) | |||||||||||||||||
| Temporary Payroll Tax Cut Continuation Act of 2011 expense | (534) | (495) | (432) | |||||||||||||||||
| Other expense | (215) | (243) | (103) | |||||||||||||||||
| Non-interest expense | (1,988) | (2,166) | (971) | |||||||||||||||||
| Income (loss) before income tax (expense) benefit | 3,481 | 3,669 | 218 | |||||||||||||||||
| Income tax (expense) benefit | (714) | (756) | (45) | |||||||||||||||||
| Net income (loss) | 2,767 | 2,913 | 173 | |||||||||||||||||
| Other comprehensive income (loss), net of taxes and reclassification adjustments | ||||||||||||||||||||
| Changes in unrealized gains (losses) related to available-for-sale securities | (395) | (384) | 438 | |||||||||||||||||
| Changes in unrealized gains (losses) related to cash flow hedge relationships | 10 | 8 | 13 | |||||||||||||||||
| Changes in defined benefit plans | (4) | (15) | (2) | |||||||||||||||||
| Total other comprehensive income (loss), net of taxes and reclassification adjustments | (389) | (391) | 449 | |||||||||||||||||
| Comprehensive income (loss) | $2,378 | $2,522 | $622 | |||||||||||||||||
| Net income (loss) | $2,767 | $2,913 | $173 | |||||||||||||||||
| Future increase in senior preferred stock liquidation preference | (2,378) | (2,522) | (382) | |||||||||||||||||
| Net income (loss) attributable to common stockholders | $389 | $391 | $(209) | |||||||||||||||||
| Net income (loss) per common share — basic and diluted | $0.12 | $0.12 | $(0.06) | |||||||||||||||||
| Weighted average common shares outstanding (in millions) — basic and diluted | 3,234 | 3,234 | 3,234 | |||||||||||||||||
Freddie Mac First Quarter 2021 Financial Results
April 29, 2021
Page 11
FREDDIE MAC
Condensed Consolidated Balance Sheets (Unaudited)
| March 31, | December 31, | |||||||||||||
(In millions, except share-related amounts) | 2021 | 2020 | ||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents (includes $61,962 and $17,379 of restricted cash and cash equivalents) | $100,979 | $23,889 | ||||||||||||
| Securities purchased under agreements to resell | 15,140 | 105,003 | ||||||||||||
| Investment securities, at fair value | 61,880 | 59,825 | ||||||||||||
| Mortgage loans held-for-sale (includes $8,093 and $14,199 at fair value) | 24,915 | 33,652 | ||||||||||||
| Mortgage loans held-for-investment (net of allowance for credit losses of $5,330 and $5,732) | 2,482,972 | 2,350,236 | ||||||||||||
| Accrued interest receivable (net of allowance of $213 and $140) | 7,662 | 7,754 | ||||||||||||
| Derivative assets, net | 2,085 | 1,205 | ||||||||||||
| Deferred tax assets, net | 6,826 | 6,557 | ||||||||||||
| Other assets (includes $5,894 and $5,775 at fair value) | 39,415 | 39,294 | ||||||||||||
| Total assets | $2,741,874 | $2,627,415 | ||||||||||||
| Liabilities and equity | ||||||||||||||
| Liabilities | ||||||||||||||
| Accrued interest payable | $5,954 | $6,210 | ||||||||||||
Debt (includes $2,364 and $2,592 at fair value) | 2,704,270 | 2,592,546 | ||||||||||||
| Derivative liabilities, net | 950 | 954 | ||||||||||||
| Other liabilities | 11,909 | 11,292 | ||||||||||||
| Total liabilities | 2,723,083 | 2,611,002 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Equity | ||||||||||||||
Senior preferred stock (liquidation preference of $89,061 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) | (64,335) | (67,102) | ||||||||||||
| AOCI, net of taxes, related to: | ||||||||||||||
| Available-for-sale securities | 415 | 810 | ||||||||||||
| Cash flow hedge relationships | (196) | (206) | ||||||||||||
| Defined benefit plans | 35 | 39 | ||||||||||||
| Total AOCI, net of taxes | 254 | 643 | ||||||||||||
| Treasury stock, at cost, 75,804,333 shares and 75,804,594 shares | (3,885) | (3,885) | ||||||||||||
| Total equity | 18,791 | 16,413 | ||||||||||||
| Total liabilities and equity | $2,741,874 | $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 condensed consolidated balance sheets. | ||||||||||||||
| March 31, | December 31, | |||||||||||||
| (In millions) | 2021 | 2020 | ||||||||||||
| Condensed Consolidated Balance Sheet Line Item | ||||||||||||||
| Assets: | ||||||||||||||
| Mortgage loans held-for-investment | $2,395,707 | $2,273,347 | ||||||||||||
| All other assets | 90,128 | 83,982 | ||||||||||||
| Total assets of consolidated VIEs | $2,485,835 | $2,357,329 | ||||||||||||
| Liabilities: | ||||||||||||||
| Debt | $2,445,829 | $2,308,176 | ||||||||||||
| All other liabilities | 5,592 | 5,610 | ||||||||||||
| Total liabilities of consolidated VIEs | $2,451,421 | $2,313,786 | ||||||||||||
First Quarter 2021 Financial Results Supplement April 29, 2021 Exhibit 99.2
2© Freddie Mac Financial Highlights $2.4 $4.1 $5.1 $5.0 $5.3 $0.2 $1.8 $2.5 $2.9 $2.8 $0.6 $1.9 $2.4 $2.5 $2.4 Net revenues Net income Comprehensive income 1Q20 2Q20 3Q20 4Q20 1Q21 Net Revenues, Net Income, and Comprehensive Income $ Billions ▪ Net income of $2.8 billion and comprehensive income of $2.4 billion for the first quarter of 2021, an increase of $2.6 billion and $1.8 billion year-over-year, respectively, driven by mortgage portfolio growth, higher deferred fee income recognition, higher revenues from Multifamily loan purchase and securitization activities, and lower credit- related expense ▪ Net revenues increased 118% year-over-year to $5.3 billion, primarily from higher net interest income and higher net investment gains
3© Freddie Mac $334 $349 $345 $345 $339 $211 $194 $198 $182 $174 $123 $155 $147 $163 $165 Mortgage-related investments portfolio Other investments portfolio 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 $2,362 $2,415 $2,545 $2,714 $2,852 $2,020 $2,061 $2,179 $2,326 $2,458 $342 $354 $366 $388 $394 Single-Family mortgage portfolio Multifamily mortgage portfolio 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 Total Portfolio Balances Total debt outstanding5 $ Billions Portfolio balance highlightsTotal mortgage portfolio1 $ Billions Total investments portfolio $ Billions 21% YoY increase ▪ Total mortgage portfolio: • Single-Family - grew $438 billion, or 22%, year-over- year • Multifamily - grew $52 billion, or 15%, year-over-year ▪ Total investments portfolio: • Mortgage-related investments portfolio - decreased $37 billion, or 18%, year-over-year • Other investments portfolio - increased $42 billion, or 34%, year-over-year 1% YoY increase 45% 45% 51% 52% 52% 30% 30% 41% 43% 43% 25% 25% 8% 4% 5% 2.4 2.5 3.4 3.6 3.5 Non-callable debt Callable debt Discount Notes and other Weighted average maturity in years 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 Note: Totals may not add due to rounding. *In February 2019, FHFA directed the company to maintain the mortgage-related investments portfolio at or below $225 billion at all times. Purchase Agreement Debt Cap $300B $288 $289 $287 $287 2,3 FHFA Limit $225B* 4 $263
4© Freddie Mac Multifamily7Single-Family6 Percentage of Loans in Forbearance 0.06% 1.82% 1.88% Forbearance Period Repayment Period Total 0.32% 0.13% 0.12% 0.41% 1.21% 2.19% Current One Month Two Months Three Months to Six Months Greater Than Six Months Total Percentage of loans in the single-family mortgage portfolio that were in forbearance by payment status as of March 31, 2021 (based on loan count). Percentage of loans in the multifamily mortgage portfolio currently under a forbearance program (based on UPB). Past Due
5© Freddie Mac Conservatorship Matters Due to changes to the terms of the senior preferred stock pursuant to the January 2021 Letter 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 $18.8 $89.1 $140.2 Net worth Senior preferred stock liquidation preference Remaining Treasury funding commitment As of March 31, 2021 $71.6 $119.7 Cumulative draws from Treasury Cumulative dividend payments to Treasury As of March 31, 2021 Net Worth, Liquidation Preference8, and Treasury Funding Commitment $ Billions
6© Freddie Mac (360,000) (4,333,000) 1,342,000 213,000 539,000 4.4% 11.1% 7.8% 6.7% 6.0% Average monthly net new jobs (non-farm) National unemployment rate (as of the last month in each quarter) 1Q20 2Q20 3Q20 4Q20 1Q21 Key Economic Indicators National home prices increased by an average of 12.9% over the past year Quarterly ending interest rates 3.50% 3.13% 2.90% 2.67% 3.17% 0.72% 0.64% 0.71% 0.93% 1.82% 30-year mortgage rate, based on Primary Mortgage Market Survey (PMMS) 10-year LIBOR 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 168 226 United States (Not Seasonally Adjusted) 2006 2009 2012 2015 2018 2021 Freddie Mac House Price Index (December 2000 = 100) (2006 Peak) National home prices since 2006 Unemployment rate and job creation
7© Freddie Mac $138 $232 $337 $383 $362 $55 $60 $101 $109 $89 $83 $172 $236 $274 $273 49 48 46 47 50 Home purchase UPB Refinance UPB 1Q20 2Q20 3Q20 4Q20 1Q21 1.26% 1.47% 1.08% 1.01% 0.73% 0.30% 1.66% 0.50% 0.38% 0.27% 0.60% 2.48% 3.04% 2.64% 2.34% One month past due Two months past due Seriously delinquent 1Q20 2Q20 3Q20 4Q20 1Q21 Single-Family Financial Highlights and Key Metrics Note: Totals may not add due to rounding. (73%) (74%) (75%) (77%) (78%) $411 $772 $1,282 $1,747 $1,738 $796 $875 $1,272 $1,373 $1,410 Net income Comprehensive income 1Q20 2Q20 3Q20 4Q20 1Q21 Single-Family net income and comprehensive income $ Millions Guarantee fees charged on new acquisitions (bps)9 $2,020 $2,061 $2,179 $2,326 $2,458 1Q20 2Q20 3Q20 4Q20 1Q21 22% YoY increase Mortgage portfolio $ Billions Single-Family delinquency rates6 New business activity $ Billions
8© Freddie Mac 40% 26% 30% 28% 25% 21% 18% 16% 18% 20% 39% 56% 54% 54% 55% Home purchase Cash-out refinance Other refinance 1Q20 2Q20 3Q20 4Q20 1Q21 752 758 761 761 759 1Q20 2Q20 3Q20 4Q20 1Q21 14% 10% 10% 10% 10% 1Q20 2Q20 3Q20 4Q20 1Q21 New business activity with debt-to-income ratio > 45% Weighted average original loan-to-value ratio (OLTV) Weighted average original credit score 74% 72% 71% 70% 69% 1Q20 2Q20 3Q20 4Q20 1Q21 Single-Family Loan Purchase Credit Characteristics2 Loan purpose
9© Freddie Mac CRT issuance protected UPB $ Billions $141 $1 $167 $167 $245 1Q20 2Q20 3Q20 4Q20 1Q21 Mortgage portfolio with credit enhancement UPB in $ Billions $1,172 $1,103 $1,133 $1,178 $1,258 58% 54% 52% 51% 51% UPB Percentage 03/31/20 06/30/20 09/30/20 12/31/20 03/31/21 Single-Family Credit Risk Transfer
10© Freddie Mac Multifamily acquisitions of units by area median income (AMI) (% of eligible units acquired) 32% 34% 39% 33% 43% 40% 37% 31% 38% 34% 24% 24% 26% 25% 20% 4% 5% 4% 4% 3% ≤60% >60% to ≤80% >80% to ≤120% >120% 1Q20 2Q20 3Q20 4Q20 1Q21 69% 69% 66% 70% 69% 1Q20 2Q20 3Q20 4Q20 1Q21 1.42 1.36 1.42 1.38 1.38 1Q20 2Q20 3Q20 4Q20 1Q21 Weighted average original loan-to-value ratio (OLTV) for new business activity Multifamily Financial Highlights and Key Metrics Weighted average original debt service coverage ratio (ODSCR) for new business activity Multifamily net income (loss) and comprehensive income (loss) $ Millions $(238) $1,005 $1,181 $1,166 $1,029 $(174) $1,063 $1,177 $1,149 $968 Net income (loss) Comprehensive income (loss) 1Q20 2Q20 3Q20 4Q20 1Q21 (89 %)
11© Freddie Mac Securitization and guarantee activities10,11 $ Billions $13 $13 $23 $28 $23 $12 $12 $21 $26 $21 $1 $1 $2 $2 $2 Guaranteed securities and other mortgage-related guarantees Unguaranteed subordinated securities issued by our securitizations 1Q20 2Q20 3Q20 4Q20 1Q21 $10 $20 $18 $35 $14 1Q20 2Q20 3Q20 4Q20 1Q21 Multifamily Key Metrics, continued New business activity2 $ Billions Note: Totals may not add due to rounding. New business activity includes LIHTC new business activity.
12© Freddie Mac 0.08% 0.17% 0.26% 1.05% 1.48% 0.10% Freddie Mac (60+ day) FDIC insured institutions (90+ day) MF CMBS market (60+ day) ACLI investment bulletin (60+ day) 1Q20 2Q20 3Q20 4Q20 1Q21 $342 $354 $366 $388 $394 1Q20 2Q20 3Q20 4Q20 1Q21 Multifamily market and Freddie Mac delinquency rates7 Mortgage portfolio unit count In Thousands Mortgage portfolio loan count In Thousands Mortgage portfolio $ Billions 27 28 28 29 30 1Q20 2Q20 3Q20 4Q20 1Q21 Multifamily Mortgage Portfolio Metrics 15% YOY increase 4,286 4,371 4,450 4,598 4,613 1Q20 2Q20 3Q20 4Q20 1Q21 Note: Totals may not add due to rounding.
13© Freddie Mac 1 81 94 52 38 1 94 74 50 8 7 6 7 6 Forbearance agreements Payment deferrals Other 1Q20 2Q20 3Q20 4Q20 1Q21 Number of families Freddie Mac helped to own or rent a home12 In Thousands Housing Market Support 637 1,028 1,338 1,598 1,365 309 609 813 936 940 217 218 340 356 291 111 201 185 306 134 Single-Family refinance borrowers Single-Family purchase borrowers Multifamily rental units 1Q20 2Q20 3Q20 4Q20 1Q21 Note: Totals may not add due to rounding. Number of Single-Family loan workouts13 In Thousands Other includes repayment plans, loan modifications, and foreclosure alternatives. 14 14 14
14© Freddie Mac Endnotes 1 Based on unpaid principal balances (UPB) of securitized mortgage loans, unsecuritized mortgage loans, and other, which primarily consists of mortgage-related guarantees. 2 The company’s Purchase Agreement with Treasury limits the amount of mortgage assets the company can own and indebtedness it can incur. It also further restricts certain aspects of the company's Single-Family and Multifamily new business activities. See the company’s Annual Report on Form 10-K for the year ended December 31, 2020 for more information. 3 Based on unpaid principal balances (UPB) of unsecuritized mortgage loans, agency mortgage-related securities, and non-agency mortgage-related securities. Excludes mortgage- related securities traded, but not yet settled. The amount of mortgage assets that the company may own in its mortgage-related investments portfolio is also currently capped under the Purchase Agreement with the Treasury at $250 billion. The Purchase Agreement cap will be lowered from $250 billion to $225 billion at the end of 2022. In addition to UPB, the calculation of mortgage assets subject to the FHFA and Purchase Agreement caps includes 10% of the notional value of interest-only securities. The balance of the mortgage-related investments portfolio as determined for these purposes was $181.5 billion as of March 31, 2021, including $7.0 billion representing 10% of the notional amount of the interest-only securities the company held at that date. With respect to the composition of Freddie Mac's mortgage-related investments portfolio, in August 2020, FHFA instructed the company to: (1) reduce the amount of agency MBS to no more than $50 billion by June 30, 2021 and no more than $20 billion by June 30, 2022, with all dollar caps to be based on UPB; and (2) reduce the UPB of its existing portfolio of collateralized mortgage obligations (CMOs), which are also sometimes referred to as REMICs, to zero by June 30, 2021. The company will have a holding period limit to sell any new CMO tranches created but not sold at issuance. CMOs do not include tranches initially retained from reperforming loans senior subordinate securitization structures. 4 The other investments portfolio is primarily used for short-term liquidity management, cash and other investments held by consolidated trusts, and other investments, which include investments in debt securities used to pledge as collateral, LIHTC partnerships, and secured lending activities. 5 Represents the company’s aggregate indebtedness for purposes of the Purchase Agreement debt cap and primarily includes the par value of Freddie Mac short-term and long-term debt used to fund its business activities. The company's debt cap under the Purchase Agreement will decrease to $270 billion on January 1, 2023 as a result of the decrease in the mortgage assets limit under the Purchase Agreement to $225 billion on December 31, 2022 pursuant to the January 2021 Letter Agreement. 6 Information related to single-family loans in forbearance is based on information reported by servicers. Beginning in 4Q 2020, Freddie Mac required single-family servicers to report all alternatives to foreclosure to the company, which include forbearance plans on all mortgages, including those where the borrower has continued to make payments in accordance with the loan's original contractual terms and remains in current status. The forbearance data the company reported in prior periods was generally limited to loans in forbearance that were past due based on the loan's original contractual terms. For the purpose of reporting delinquency rates, the company reports single-family loans in forbearance 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. 7 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. 8 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 under the Purchase Agreement, and the $16.4 billion in increases to our Net Worth Amount pursuant to the Letter Agreement. 9 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 guarantee fee remitted to Treasury as part of the Temporary Payroll Tax Cut Continuation Act of 2011. 10 Multifamily's primary securitization products are K Certificates and SB Certificates. In these transactions, the company guarantees the senior securities, but does not issue or guarantee the mezzanine or subordinated securities. The interest-rate risk and a substantial amount of the expected and stress credit risk is sold to third-party investors through the mezzanine and subordinated securities, thereby reducing the company's risk exposure. 11 Excludes re-securitization UPB of primary and other securitization products. 12 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. 13 Consists of both home retention actions and foreclosure alternatives. 14 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.
15© Freddie Mac 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, 2020, Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, and Current Reports on Form 8-K, which are available on the Investor Relations page of the company’s website at www.freddiemac.com/investors 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.