Federal Home Loan Mortgage Corp 8-K, filed Feb 22, 2023
Federal Home Loan Mortgage Corp (FMCC)
8-K
2023-02-22
For: 2023-02-22
View Original
Added on
April 05, 2026
About this 8-K
Federal Home Loan Mortgage Corp filed this 8-K on February 22, 2023.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
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 22, 2023
(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 February 22, 2023, Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation) announced its results of operations for the quarter and full-year ended December 31, 2022. A copy of the related press release for the quarter and full-year ended December 31, 2022 is being filed as Exhibit 99.1 to this report and is incorporated herein by reference. In addition, a copy of the Fourth Quarter 2022 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: February 22, 2023
__________________________________________________________________________________________________________
Freddie Mac Form 8-K
| Exhibit 99.1 | ||||||||
Freddie Mac Reports Net Income of $1.8 Billion for Fourth Quarter 2022
and $9.3 Billion for Full-Year 2022
Making Home Possible for 2.5 Million Households in 2022
•Financed 1.8 million mortgages, with 58% of eligible loans being affordable to low- to moderate-income families, and enabled 444,000 first-time homebuyers to purchase a home
•Financed 693,000 rental units, with 96% of eligible units being affordable to low- to moderate-income families
Fourth Quarter 2022 Financial Results
Market Liquidity Provided - $104 Billion | Homes and Rental Units Financed - 504,000 | Net Worth - $37.0 Billion | Total Mortgage Portfolio - $3.4 Trillion | |||||||||||||||||
Consolidated | •Net income of $1.8 billion, a decrease of 36% year-over-year, primarily driven by lower net revenues and a credit reserve build in Single-Family •Net revenues of $4.8 billion, a decrease of 13% year-over-year, primarily driven by a decline in non-interest income •Provision for credit losses of $0.6 billion, up from $0.1 billion in the fourth quarter of 2021, primarily driven by declining observed and forecasted house price appreciation, partially offset by lower purchase volumes •New business activity of $75 billion, down 72% year-over-year, as refinance activity slowed due to rising mortgage interest rates. Full-year 2022 activity of $541 billion, down 56% year-over-year •Mortgage portfolio of $3.0 trillion, up 7% year-over-year, driven by an increase in average portfolio loan size and a higher share of single-family mortgage debt outstanding •Serious delinquency rate of 0.66%, down from 1.12% at December 31, 2021, primarily driven by a decline in loans in forbearance •Completed approximately 22,000 loan workouts •61% of mortgage portfolio covered by credit enhancements •New business activity of $29 billion, up 16% year-over-year. Full-year 2022 activity of $73 billion, up 4% year-over-year, primarily driven by a larger loan purchase cap available during 2022 •Mortgage portfolio of $429 billion, up 3% year-over-year, primarily driven by new business activity, partially offset by increased borrower payoff activity driven by market conditions •Delinquency rate of 0.12%, up from 0.08% at December 31, 2021 •93% of mortgage portfolio covered by credit enhancements | "In a year with significant volatility and a challenging macroeconomic environment, Freddie Mac made home possible for 2.5 million families, while delivering solid financial results. Looking ahead, we expect to place even more emphasis on our mission by further advancing our affordable, sustainable, and equitable housing plans without compromising safety and soundness. We expect to accomplish these objectives by leveraging our talented workforce, collaborating with market participants to find new solutions, and continuously working to effectively manage risk. These actions will enable Freddie Mac to continue to build financial strength and stability that is central to fulfilling our mission." Michael J. DeVito Chief Executive Officer | ||||||||||||
Net Revenues $4.8 Billion Net Income $1.8 Billion Comprehensive Income $1.8 Billion | ||||||||||||||
Single-Family | ||||||||||||||
Net Revenues $4.2 Billion Net Income $1.5 Billion Comprehensive Income $1.5 Billion | ||||||||||||||
Multifamily | ||||||||||||||
Net Revenues $0.6 Billion Net Income $0.3 Billion Comprehensive Income $0.3 Billion | ||||||||||||||
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 2
McLean, VA — Freddie Mac (OTCQB: FMCC) today reported net income of $1.8 billion for the fourth quarter of 2022, a decrease of 36% year-over-year, primarily driven by lower net revenues and a credit reserve build in Single-Family.
Net revenues were $4.8 billion for the fourth quarter of 2022, down 13% year-over-year, primarily driven by a decline in non-interest income. Net interest income for the fourth quarter of 2022 was $4.6 billion, down 4% year-over-year, primarily driven by lower deferred fee income due to slower prepayments as a result of higher mortgage interest rates. Non-interest income for the fourth quarter of 2022 was $0.2 billion, down 70% year-over-year, primarily driven by a decline in net investment gains in both Single-Family and Multifamily.
Provision for credit losses was $0.6 billion for the fourth quarter of 2022, up from $0.1 billion for the fourth quarter of 2021, primarily driven by declining observed and forecasted house price appreciation, partially offset by lower purchase volumes.
Non-interest expense for the fourth quarter of 2022 was $2.0 billion, up 3% year-over-year, primarily driven by higher credit enhancement expense as a result of a higher volume of outstanding credit risk transfer transactions and higher spreads on recent transactions.
Full-Year 2022 Financial Results
Freddie Mac reported net income of $9.3 billion for full-year 2022, a decrease of 23% year-over-year, primarily driven by a credit reserve build in Single-Family.
Net revenues were $21.3 billion for full-year 2022, down 3% year-over-year, as higher net interest income in Single-Family was offset by a decline in non-interest income in Multifamily. Net interest income for full-year 2022 was $18.0 billion, up 2% year-over-year, as continued mortgage portfolio growth and higher average portfolio guarantee fee rates were partially offset by lower deferred fee income due to slower prepayments as a result of higher mortgage interest rates. Non-interest income for full-year 2022 was $3.3 billion, down 25% year-over-year, primarily driven by a decrease in net investment gains in Multifamily.
Provision for credit losses was $1.8 billion for full-year 2022, compared to a benefit for credit losses of $1.0 billion for full-year 2021, primarily driven by declining observed and forecasted house price appreciation.
Non-interest expense for full-year 2022 remained $7.8 billion, as higher credit enhancement expense driven by a higher volume of outstanding credit risk transfer transactions and higher spreads on transactions executed during 2022 was offset by a benefit for credit enhancement recoveries due to an increase in expected credit losses on covered loans.
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 3
Summary of Consolidated Statements of Income and Comprehensive Income
| (Dollars in millions) | 4Q 2022 | 3Q 2022 | Change | 4Q 2021 | Change | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||
| Net interest income | $4,588 | $4,554 | $34 | $4,756 | ($168) | $18,005 | $17,580 | |||||||||||||||||||||||||||||||||||||
| Non-interest income | 245 | 627 | (382) | 809 | (564) | 3,259 | 4,371 | |||||||||||||||||||||||||||||||||||||
| Net revenues | 4,833 | 5,181 | (348) | 5,565 | (732) | 21,264 | 21,951 | |||||||||||||||||||||||||||||||||||||
| (Provision) benefit for credit losses | (575) | (1,796) | 1,221 | (138) | (437) | (1,841) | 1,041 | |||||||||||||||||||||||||||||||||||||
| Non-interest expense | (2,042) | (1,825) | (217) | (1,992) | (50) | (7,819) | (7,793) | |||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 2,216 | 1,560 | 656 | 3,435 | (1,219) | 11,604 | 15,199 | |||||||||||||||||||||||||||||||||||||
| Income tax expense | (453) | (247) | (206) | (691) | 238 | (2,277) | (3,090) | |||||||||||||||||||||||||||||||||||||
| Net income | 1,763 | 1,313 | 450 | 2,744 | (981) | 9,327 | 12,109 | |||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) , net of taxes and reclassification adjustments | 25 | (181) | 206 | (22) | 47 | (342) | (489) | |||||||||||||||||||||||||||||||||||||
| Comprehensive income | $1,788 | $1,132 | $656 | $2,722 | ($934) | $8,985 | $11,620 | |||||||||||||||||||||||||||||||||||||
| Conservatorship metrics (in millions) | ||||||||||||||||||||||||||||||||||||||||||||
| Net worth | $37,018 | $35,230 | $1,788 | $28,033 | $8,985 | $37,018 | $28,033 | |||||||||||||||||||||||||||||||||||||
| Senior preferred stock liquidation preference | 107,878 | 106,746 | 1,132 | 97,959 | 9,919 | 107,878 | 97,959 | |||||||||||||||||||||||||||||||||||||
| Remaining Treasury funding commitment | 140,162 | 140,162 | — | 140,162 | — | 140,162 | 140,162 | |||||||||||||||||||||||||||||||||||||
| Cumulative dividend payments to Treasury | 119,680 | 119,680 | — | 119,680 | — | 119,680 | 119,680 | |||||||||||||||||||||||||||||||||||||
| Cumulative draws from Treasury | 71,648 | 71,648 | — | 71,648 | — | 71,648 | 71,648 | |||||||||||||||||||||||||||||||||||||
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 4
| Single-Family Segment | ||
| Financial Results | ||
Net Revenues
(In billions)
Net Income
(In billions)
Comprehensive Income
(In billions)
| (Dollars in millions) | 4Q 2022 | 3Q 2022 | Change | 4Q 2021 | Change | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||
| Net interest income | $4,363 | $4,363 | $— | $4,425 | ($62) | $17,067 | $16,273 | |||||||||||||||||||||||||||||||||||||
| Non-interest income | (118) | 58 | (176) | 277 | (395) | 1,684 | 954 | |||||||||||||||||||||||||||||||||||||
| Net revenues | 4,245 | 4,421 | (176) | 4,702 | (457) | 18,751 | 17,227 | |||||||||||||||||||||||||||||||||||||
| (Provision) benefit for credit losses | (521) | (1,784) | 1,263 | (157) | (364) | (1,772) | 919 | |||||||||||||||||||||||||||||||||||||
| Non-interest expense | (1,863) | (1,653) | (210) | (1,791) | (72) | (7,148) | (7,075) | |||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 1,861 | 984 | 877 | 2,754 | (893) | 9,831 | 11,071 | |||||||||||||||||||||||||||||||||||||
| Income tax expense | (381) | (141) | (240) | (555) | 174 | (1,929) | (2,251) | |||||||||||||||||||||||||||||||||||||
| Net income | 1,480 | 843 | 637 | 2,199 | (719) | 7,902 | 8,820 | |||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss), net of taxes and reclassification adjustments | 22 | (39) | 61 | 5 | 17 | (24) | (379) | |||||||||||||||||||||||||||||||||||||
| Comprehensive income | $1,502 | $804 | $698 | $2,204 | ($702) | $7,878 | $8,441 | |||||||||||||||||||||||||||||||||||||
Fourth Quarter 2022
Net income of $1.5 billion, down 33% year-over-year.
•Net revenues were $4.2 billion, down 10% year-over year. Net interest income was $4.4 billion, down 1% year-over-year, as continued mortgage portfolio growth and higher average portfolio guarantee fee rates were offset by lower deferred fee income due to slower prepayments as a result of higher mortgage interest rates. Non-interest income was a loss of $0.1 billion for the fourth quarter of 2022, compared to non-interest income of $0.3 billion for the fourth quarter of 2021, primarily driven by interest-rate-related fair value losses and lower gains on sales of mortgage loans due to lower volume.
•Provision for credit losses was $0.5 billion for the fourth quarter of 2022, up from $0.2 billion in the fourth quarter of 2021, primarily driven by declining observed and forecasted house price appreciation, partially offset by lower purchase volumes.
Full-Year 2022
Net income of $7.9 billion, down 10% year-over-year.
•Net revenues were $18.8 billion, up 9% year-over-year. Net interest income was $17.1 billion, up 5% year-over-year, as continued mortgage portfolio growth and higher average portfolio guarantee fee rates were partially offset by lower deferred fee income due to slower prepayments as a result of higher mortgage interest rates. Non-interest income was $1.7 billion, up 77% year-over-year, primarily driven by gains on commitments to hedge the Single-Family securitization pipeline in the first quarter of 2022.
•Provision for credit losses was $1.8 billion for full-year 2022, compared to a benefit for credit losses of $0.9 billion for full-year 2021, primarily driven by declining observed and forecasted house price appreciation.
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 5
| Single-Family Segment | ||
| Business Results | ||
New Business Activity
(UPB in billions)
Mortgage Portfolio
(UPB in billions)
Serious Delinquency Rate
| 4Q 2022 | 3Q 2022 | Change | 4Q 2021 | Change | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||
| New Business Statistics: | ||||||||||||||||||||||||||||||||||||||||||||
| Single-Family homes funded (in thousands) | 252 | 392 | (140) | 955 | (703) | 1,803 | 4,236 | |||||||||||||||||||||||||||||||||||||
| Purchase borrowers (in thousands) | 200 | 297 | (97) | 357 | (157) | 1,039 | 1,378 | |||||||||||||||||||||||||||||||||||||
| Refinance borrowers (in thousands) | 52 | 95 | (43) | 598 | (546) | 764 | 2,858 | |||||||||||||||||||||||||||||||||||||
Affordable to low- to moderate-income families (%)(1) | 57 | 56 | 1 | 54 | 3 | 58 | 52 | |||||||||||||||||||||||||||||||||||||
First-time homebuyers (%)(2) | 49 | 49 | — | 46 | 3 | 49 | 46 | |||||||||||||||||||||||||||||||||||||
| Average estimated guarantee fee rate (bps) | 51 | 54 | (3) | 47 | 4 | 51 | 49 | |||||||||||||||||||||||||||||||||||||
| Weighted average original loan-to-value (LTV) (%) | 78 | 78 | — | 71 | 7 | 75 | 71 | |||||||||||||||||||||||||||||||||||||
| Weighted average original credit score | 747 | 747 | 0 | 748 | (1) | 746 | 753 | |||||||||||||||||||||||||||||||||||||
| UPB covered by new CRT issuance (in billions) | $58 | $136 | ($78) | $242 | ($184) | $553 | $828 | |||||||||||||||||||||||||||||||||||||
| Portfolio Statistics: | ||||||||||||||||||||||||||||||||||||||||||||
| Average estimated guarantee fee rate (bps) | 48 | 48 | — | 46 | 2 | 48 | 46 | |||||||||||||||||||||||||||||||||||||
| Weighted average current LTV (%) | 54 | 53 | 1 | 55 | (1) | 54 | 55 | |||||||||||||||||||||||||||||||||||||
| Weighted average current credit score | 756 | 756 | — | 756 | — | 756 | 756 | |||||||||||||||||||||||||||||||||||||
| Loan count (in millions) | 13.6 | 13.6 | — | 13.1 | 0.5 | 13.6 | 13.1 | |||||||||||||||||||||||||||||||||||||
| Credit-Related Statistics: | ||||||||||||||||||||||||||||||||||||||||||||
| Loan workout activity (in thousands) | 22 | 28 | (6) | 62 | (40) | 136 | 317 | |||||||||||||||||||||||||||||||||||||
| Credit enhancement coverage (%) | 61 | 61 | — | 53 | 8 | 61 | 53 | |||||||||||||||||||||||||||||||||||||
(1) Eligible loans acquired affordable to families earning at or below 120% of area median income (AMI).
(2) First-time homebuyers as a percentage of purchase borrowers with loans secured by primary residences.
Fourth Quarter 2022 Business Highlights
•The company provided funding for 252,000 single-family loans, 200,000 of which were purchase loans, as refinance activity slowed due to higher mortgage interest rates. First-time homebuyers represented 49% of new single-family home purchase loans.
•Single-Family loan workout activity decreased to 22,000 from 62,000 in the fourth quarter of 2021, as the overall forbearance population continued to decline.
•Credit enhancement coverage of the Single-Family mortgage portfolio increased to 61% from 53% in the fourth quarter of 2021, primarily due to the new business activity included in credit risk transfer (CRT) transactions.
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 6
| Multifamily Segment | ||
| Financial Results | ||
Net Revenues
(In billions)
Net Income
(In billions)
Comprehensive Income
(In billions)
| (Dollars in millions) | 4Q 2022 | 3Q 2022 | Change | 4Q 2021 | Change | 2022 | 2021 | |||||||||||||||||||||||||||||||||||||
| Net interest income | $225 | $191 | $34 | $331 | ($106) | $938 | $1,307 | |||||||||||||||||||||||||||||||||||||
| Non-interest income | 363 | 569 | (206) | 532 | (169) | 1,575 | 3,417 | |||||||||||||||||||||||||||||||||||||
| Net revenues | 588 | 760 | (172) | 863 | (275) | 2,513 | 4,724 | |||||||||||||||||||||||||||||||||||||
| (Provision) benefit for credit losses | (54) | (12) | (42) | 19 | (73) | (69) | 122 | |||||||||||||||||||||||||||||||||||||
| Non-interest expense | (179) | (172) | (7) | (201) | 22 | (671) | (718) | |||||||||||||||||||||||||||||||||||||
| Income before income tax expense | 355 | 576 | (221) | 681 | (326) | 1,773 | 4,128 | |||||||||||||||||||||||||||||||||||||
| Income tax expense | (72) | (106) | 34 | (136) | 64 | (348) | (839) | |||||||||||||||||||||||||||||||||||||
| Net income | 283 | 470 | (187) | 545 | (262) | 1,425 | 3,289 | |||||||||||||||||||||||||||||||||||||
| Total other comprehensive income (loss), net of taxes and reclassification adjustments | 3 | (142) | 145 | (27) | 30 | (318) | (110) | |||||||||||||||||||||||||||||||||||||
| Comprehensive income | $286 | $328 | ($42) | $518 | ($232) | $1,107 | $3,179 | |||||||||||||||||||||||||||||||||||||
Fourth Quarter 2022
Net income of $0.3 billion, down 48% year-over-year.
•Net revenues were $0.6 billion, down 32% year-over-year. Net interest income was $0.2 billion, down 32% year-over-year. Non-interest income was $0.4 billion, down 32% year-over-year, primarily due to lower net investment gains, driven by a decline in revenue from held-for-sale loan purchase and securitization activity as a result of lower volumes and lower margins.
Full-Year 2022
Net income of $1.4 billion, down 57% year-over-year.
•Net revenues were $2.5 billion, down 47% year-over-year. Net interest income was $0.9 billion, down 28% year-over-year, partially driven by higher costs on an increased volume of When-Issued K-Deals. Non-interest income was $1.6 billion, down 54% year-over-year, primarily due to lower net investment gains, driven by spread widening as well as a decline in revenue from held-for-sale loan purchase and securitization activity as a result of lower volumes and lower margins.
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 7
| Multifamily Segment | ||
| Business Results | ||
New Business Activity
(UPB in billions)
Mortgage Portfolio
(UPB in billions)
Delinquency Rate
| 4Q 2022 | 3Q 2022 | Change | 4Q 2021 | Change | 2022 | 2021 | ||||||||||||||||||||||||||||||||||||||
| New Business Statistics: | ||||||||||||||||||||||||||||||||||||||||||||
| Number of rental units financed (in thousands) | 252 | 150 | 102 | 223 | 29 | 693 | 655 | |||||||||||||||||||||||||||||||||||||
Affordable to low-income families (%)(1) | 67 | 75 | (8) | 57 | 10 | 74 | 69 | |||||||||||||||||||||||||||||||||||||
Affordable to low- to moderate-income families (%)(2) | 95 | 96 | (1) | 91 | 4 | 96 | 94 | |||||||||||||||||||||||||||||||||||||
| Weighted average original LTV (%) | 58 | 59 | (1) | 67 | (9) | 61 | 68 | |||||||||||||||||||||||||||||||||||||
| Weighted average original debt service coverage ratio | 1.25 | 1.31 | (0.06) | 1.33 | (0.08) | 1.30 | 1.35 | |||||||||||||||||||||||||||||||||||||
| UPB covered by new CRT issuance (in billions) | $16 | $11 | $5 | $23 | ($7) | $62 | $84 | |||||||||||||||||||||||||||||||||||||
| Portfolio Statistics: | ||||||||||||||||||||||||||||||||||||||||||||
| Average guarantee fee rate charged (bps) | 43 | 43 | — | 42 | 1 | 43 | 42 | |||||||||||||||||||||||||||||||||||||
| Unit count (in thousands) | 4,586 | 4,523 | 63 | 4,652 | (66) | 4,586 | 4,652 | |||||||||||||||||||||||||||||||||||||
| Credit-Related Statistics: | ||||||||||||||||||||||||||||||||||||||||||||
| Credit enhancement coverage (%) | 93 | 95 | (2) | 94 | (1) | 93 | 94 | |||||||||||||||||||||||||||||||||||||
(1) Eligible units acquired affordable to families earning at or below 80% of AMI.
(2) Eligible units acquired affordable to families earning at or below 120% of AMI.
Fourth Quarter 2022 Business Highlights
•The company provided financing for 252,000 multifamily rental units. 67% of eligible multifamily rental units financed were affordable to low-income families.
•The Multifamily delinquency rate decreased slightly quarter-over-quarter and increased year-over-year. The year-over-year increase was primarily due to delinquencies related to a single loan pool having a common sponsor. The loans in the pool are included in a K Certificate with subordination.
•The UPB of mortgage loans covered by new CRT transactions decreased year-over-year, primarily due to fewer securitizations with subordination as a result of a smaller average held-for-sale securitization pipeline.
•While the mortgage portfolio increased year-over-year, total portfolio unit count decreased, primarily driven by the impact of portfolio payoffs and higher average per unit costs of newly financed multifamily properties as a result of property price appreciation.
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
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, 2022.
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 2022. 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 $107.9 billion on December 31, 2022 based on the increase in the Net Worth Amount during the third quarter of 2022, and will increase to $109.7 billion on March 31, 2023 based on the increase in the Net Worth Amount during the fourth quarter of 2022.
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, 2022 and the company’s Fourth Quarter 2022 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 22, 2023, 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/xwruyjmi. 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 including, but not limited to, changes in observed and forecasted house price appreciation, its market share, the effect of legislative and regulatory developments and new accounting guidance, the credit quality of loans the company owns or guarantees, the costs and benefits of the company’s CRT transactions, the effects of natural disasters, other catastrophic events, and significant climate change effects and actions taken in response thereto on its business, 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, changes in the fiscal and monetary policies of the Federal Reserve, and the impacts of legislation or regulations and new or amended accounting guidance, that 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, 2022, 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
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 9
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 Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 10
FREDDIE MAC
Consolidated Statements of Income and Comprehensive Income
(In millions, except share-related amounts) | 4Q 2022 | 3Q 2022 | 4Q 2021 | 2022 | 2021 | |||||||||||||||||||||||||||
| Net interest income | ||||||||||||||||||||||||||||||||
| Interest income | $23,816 | $21,894 | $16,604 | $83,458 | $61,527 | |||||||||||||||||||||||||||
| Interest expense | (19,228) | (17,340) | (11,848) | (65,453) | (43,947) | |||||||||||||||||||||||||||
| Net interest income | 4,588 | 4,554 | 4,756 | 18,005 | 17,580 | |||||||||||||||||||||||||||
| Non-interest income | ||||||||||||||||||||||||||||||||
| Guarantee income | 383 | 125 | 182 | 783 | 1,032 | |||||||||||||||||||||||||||
| Investment gains, net | (280) | 415 | 519 | 1,969 | 2,746 | |||||||||||||||||||||||||||
| Other income | 142 | 87 | 108 | 507 | 593 | |||||||||||||||||||||||||||
| Non-interest income | 245 | 627 | 809 | 3,259 | 4,371 | |||||||||||||||||||||||||||
| Net revenues | 4,833 | 5,181 | 5,565 | 21,264 | 21,951 | |||||||||||||||||||||||||||
| (Provision) benefit for credit losses | (575) | (1,796) | (138) | (1,841) | 1,041 | |||||||||||||||||||||||||||
| Non-interest expense | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | (390) | (387) | (356) | (1,509) | (1,398) | |||||||||||||||||||||||||||
| Credit enhancement expense | (559) | (542) | (428) | (2,118) | (1,518) | |||||||||||||||||||||||||||
| Benefit for (decrease in) credit enhancement recoveries | 44 | 210 | (32) | 236 | (542) | |||||||||||||||||||||||||||
| Legislative assessments expense | (749) | (753) | (761) | (3,009) | (2,882) | |||||||||||||||||||||||||||
| Other expense | (388) | (353) | (415) | (1,419) | (1,453) | |||||||||||||||||||||||||||
| Non-interest expense | (2,042) | (1,825) | (1,992) | (7,819) | (7,793) | |||||||||||||||||||||||||||
| Income before income tax expense | 2,216 | 1,560 | 3,435 | 11,604 | 15,199 | |||||||||||||||||||||||||||
| Income tax expense | (453) | (247) | (691) | (2,277) | (3,090) | |||||||||||||||||||||||||||
| Net income | 1,763 | 1,313 | 2,744 | 9,327 | 12,109 | |||||||||||||||||||||||||||
| Other comprehensive income (loss), net of taxes and reclassification adjustments | 25 | (181) | (22) | (342) | (489) | |||||||||||||||||||||||||||
| Comprehensive income | $1,788 | $1,132 | $2,722 | $8,985 | $11,620 | |||||||||||||||||||||||||||
| Net income | $1,763 | $1,313 | $2,744 | $9,327 | $12,109 | |||||||||||||||||||||||||||
| Amounts attributable to senior preferred stock | (1,788) | (1,132) | (2,722) | (8,985) | (11,620) | |||||||||||||||||||||||||||
| Net income attributable to common stockholders | ($25) | $181 | $22 | $342 | $489 | |||||||||||||||||||||||||||
| Net income per common share | ($0.01) | $0.06 | $0.01 | $0.11 | $0.15 | |||||||||||||||||||||||||||
| Weighted average common shares (in millions) | 3,234 | 3,234 | 3,234 | 3,234 | 3,234 | |||||||||||||||||||||||||||
Freddie Mac Fourth Quarter and Full-Year 2022 Financial Results
February 22, 2023
Page 11
FREDDIE MAC
Consolidated Balance Sheets
| December 31, | December 31, | |||||||||||||
(In millions, except share-related amounts) | 2022 | 2021 | ||||||||||||
| Assets | ||||||||||||||
Cash and cash equivalents (includes $707 and $1,695 of restricted cash and cash equivalents) | $6,360 | $10,150 | ||||||||||||
| Securities purchased under agreements to resell | 87,295 | 71,203 | ||||||||||||
| Investment securities, at fair value | 38,701 | 53,015 | ||||||||||||
Mortgage loans held-for-sale (includes $3,218 and $10,498 at fair value) | 12,197 | 19,778 | ||||||||||||
Mortgage loans held-for-investment (net of allowance for credit losses of $7,391 and $4,947 and includes $1,214 and $0 at fair value) | 3,022,318 | 2,828,331 | ||||||||||||
| Accrued interest receivable | 8,529 | 7,474 | ||||||||||||
| Deferred tax assets, net | 5,777 | 6,214 | ||||||||||||
Other assets (includes $5,890 and $6,594 at fair value) | 27,156 | 29,421 | ||||||||||||
| Total assets | $3,208,333 | $3,025,586 | ||||||||||||
| Liabilities and equity | ||||||||||||||
| Liabilities | ||||||||||||||
| Accrued interest payable | $7,309 | $6,268 | ||||||||||||
Debt (includes $3,047 and $2,478 at fair value) | 3,145,832 | 2,980,185 | ||||||||||||
Other liabilities (includes $759 and $287 at fair value) | 18,174 | 11,100 | ||||||||||||
| Total liabilities | 3,171,315 | 2,997,553 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Equity | ||||||||||||||
Senior preferred stock (liquidation preference of $107,878 and $97,959) | 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 outstanding | — | — | ||||||||||||
| Retained earnings (accumulated deficit) | (45,666) | (54,993) | ||||||||||||
| AOCI, net of taxes, related to: | ||||||||||||||
| Available-for-sale securities | (84) | 297 | ||||||||||||
| Other | (104) | (143) | ||||||||||||
| Total AOCI, net of taxes | (188) | 154 | ||||||||||||
Treasury stock, at cost, 75,804,333 shares | (3,885) | (3,885) | ||||||||||||
| Total equity | 37,018 | 28,033 | ||||||||||||
| Total liabilities and equity | $3,208,333 | $3,025,586 | ||||||||||||
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) | 2022 | 2021 | ||||||||||||
| Assets: | ||||||||||||||
Cash and cash equivalents (includes $610 and $1,595 of restricted cash and cash equivalents) | $611 | $1,596 | ||||||||||||
| Securities purchased under agreements to resell | 9,703 | 34,000 | ||||||||||||
| Investment securities, at fair value | 126 | 420 | ||||||||||||
| Mortgage loans held-for-investment, net | 2,971,601 | 2,784,626 | ||||||||||||
| Accrued interest receivable, net | 7,944 | 7,019 | ||||||||||||
| Other assets | 5,019 | 11,265 | ||||||||||||
| Total assets of consolidated VIEs | $2,995,004 | $2,838,926 | ||||||||||||
| Liabilities: | ||||||||||||||
| Accrued interest payable | $6,619 | $5,823 | ||||||||||||
| Debt | 2,979,070 | 2,803,054 | ||||||||||||
| Total liabilities of consolidated VIEs | $2,985,689 | $2,808,877 | ||||||||||||
© Freddie Mac Fourth Quarter 2022 Financial Results Supplement February 22, 2023 Exhibit 99.2
© Freddie Mac 2 Financial Highlights $5.6 $5.8 $5.4 $5.2 $4.8 $2.7 $3.8 $2.5 $1.3 $1.8 Net revenues Net income 4Q21 1Q22 2Q22 3Q22 4Q22 Net revenues and net income $ Billions ▪ Net income of $1.8 billion for the fourth quarter of 2022, a decrease of 36% year-over-year, primarily driven by lower net revenues and a credit reserve build in Single-Family. ▪ Net revenues of $4.8 billion for the fourth quarter of 2022, a decrease of 13% year-over-year, primarily driven by a decline in non-interest income.
© Freddie Mac 3 $3,207 $3,299 $3,343 $3,387 $3,415 $2,792 $2,884 $2,928 $2,971 $2,986 $415 $415 $415 $416 $429 Single-Family mortgage portfolio Multifamily mortgage portfolio 12/31/21 03/31/22 06/30/22 09/30/22 12/31/22 Mortgage Portfolio Balances Mortgage portfolio1 UPB in $ Billions 6% YoY increase 3% YoY increase 7% YoY increase ▪ Total mortgage portfolio increased 6% year-over-year to $3.4 trillion, driven by a 7% increase in the Single- Family mortgage portfolio and a 3% increase in the Multifamily mortgage portfolio.
© Freddie Mac 4 $37.0 $107.9 $140.2 Net worth Senior preferred stock liquidation preference Remaining Treasury funding commitment As of December 31, 2022 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 preference, and Treasury funding commitment $ Billions $71.6 $119.7 Cumulative draws from Treasury Cumulative dividend payments to Treasury As of December 31, 2022 2
© Freddie Mac 5 National home prices increased by an average of 4.1% over the past year 3.11% 4.67% 5.70% 6.70% 6.42% 0.05% 0.16% 1.09% 2.47% 4.06% 30-year mortgage rate, based on Primary Mortgage Market Survey (PMMS) SOFR 12/31/21 03/31/22 06/30/22 09/30/22 12/31/22 Key Economic Indicators Quarterly ending interest rates SOFR interest rates are 30-day average rates.
© Freddie Mac 6 $2,792 $2,884 $2,928 $2,971 $2,986 4Q21 1Q22 2Q22 3Q22 4Q22 0.81% 0.73% 0.81% 0.79% 0.94% 0.20% 0.20% 0.19% 0.20% 0.24% 1.12% 0.92% 0.76% 0.67% 0.66% One month past due Two months past due Seriously delinquent 4Q21 1Q22 2Q22 3Q22 4Q22 $271 $207 $138 $121 $75 $111 $93 $86 $98 $63 $160 $114 $52 $23 $12 47 49 52 54 51 Home purchase Refinance 4Q21 1Q22 2Q22 3Q22 4Q22 Single-Family Financial Highlights and Key Metrics $4.7 $5.2 $4.9 $4.4 $4.2 $2.2 $3.4 $2.2 $0.8 $1.5 Net revenues Net income 4Q21 1Q22 2Q22 3Q22 4Q22 Net revenues and net income $ Billions 7% YoY increase Mortgage portfolio UPB in $ Billions Average estimated guarantee fee rate on new acquisitions (bps)3 Delinquency rates New business activity UPB in $ Billions
© Freddie Mac 7 71% 72% 75% 78% 78% 4Q21 1Q22 2Q22 3Q22 4Q22 41% 45% 62% 80% 84% 31% 33% 28% 16% 12%28% 22% 10% 4% 4% Home purchase Cash-out refinance Other refinance 4Q21 1Q22 2Q22 3Q22 4Q22 748 746 744 747 747 4Q21 1Q22 2Q22 3Q22 4Q22 13% 15% 17% 19% 22% 4Q21 1Q22 2Q22 3Q22 4Q22 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 $242 $208 $151 $136 $58 4Q21 1Q22 2Q22 3Q22 4Q22 Mortgage portfolio with credit enhancement UPB in $ Billions $1,491 $1,594 $1,726 $1,803 $1,83253% 55% 59% 61% 61% UPB Percentage 12/31/21 03/31/22 06/30/22 09/30/22 12/31/22 Single-Family Credit Risk Transfer
© Freddie Mac 9 $25 $15 $15 $14 $29 4Q21 1Q22 2Q22 3Q22 4Q22 0.08% 0.12% 0.25% 0.15% 1.41% 0.92% 0.00% Freddie Mac (60+ day) FDIC insured institutions (90+ day) MF CMBS market (60+ day) ACLI investment bulletin (60+ day) 4Q21 1Q22 2Q22 3Q22 4Q22 Multifamily delinquency rates $415 $415 $415 $416 $429 4,652 4,616 4,562 4,523 4,586 Mortgage portfolio Total unit count (in thousands) 4Q21 1Q22 2Q22 3Q22 4Q22 Multifamily Financial Highlights and Key Metrics Net revenues and net income $ Billions $0.9 $0.6 $0.5 $0.8 $0.6$0.5 $0.4 $0.3 $0.5 $0.3 Net revenues Net income 4Q21 1Q22 2Q22 3Q22 4Q22 (89 %) New business activity $ Billions Mortgage portfolio UPB in $ Billions 3% YoY increase The delinquency rate for FDIC insured institutions is as of September 30, 2022 (latest available information). New business activity subject to the FHFA loan purchase cap of $70 billion for 2021 and $78 billion for 2022.
© Freddie Mac 10 Acquisitions of units by area median income (AMI) (% of eligible units acquired) 25% 53% 53% 44% 34% 32% 28% 27% 31% 33% 34% 16% 17% 21% 28% 9% 3% 3% 4% 5% ≤60% >60% to ≤80% >80% to ≤120% >120% 4Q21 1Q22 2Q22 3Q22 4Q22 1.33 1.33 1.33 1.31 1.25 67% 67% 63% 59% 58% Weighted average ODSCR Weighted average OLTV ratio 4Q21 1Q22 2Q22 3Q22 4Q22 Multifamily New Business Characteristics (89 %) Weighted average original debt service coverage ratio (ODSCR) and weighted average OLTV ratio
© Freddie Mac 11 $389 $389 $397 $394 $398 94% 94% 96% 95% 93% UPB Percentage 12/31/21 03/31/22 06/30/22 09/30/22 12/31/22 Mortgage portfolio with credit enhancement UPB in $ Billions $23 $14 $21 $11 $16 4Q21 1Q22 2Q22 3Q22 4Q22 Multifamily Credit Risk Transfer UPB covered by new CRT issuance $ Billions
© Freddie Mac 12 62 49 37 28 22 17 10 8 6 6 39 23 16 12 10 6 16 13 10 6 Forbearance and other Payment deferral plans Loan modifications 4Q21 1Q22 2Q22 3Q22 4Q22 Number of families Freddie Mac helped to own or rent a home4 In Thousands Housing Market Support 1,178 834 616 542 504 598 412 205 95 52 357 279 263 297 200 223 143 148 150 252 Single-Family refinance borrowers Single-Family home purchase borrowers Multifamily rental units 4Q21 1Q22 2Q22 3Q22 4Q22 Other includes repayment plans and foreclosure alternatives. 6 Number of Single-Family loan workouts5 In Thousands 6 6
© Freddie Mac 13 Endnotes 1 Based on unpaid principal balances (UPB) of mortgage loans held-for-investment, mortgage loans held-for-sale, and mortgage loans underlying our 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 $35.2 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 the 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 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. 5 Consists of both home retention actions and foreclosure alternatives. 6 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 including, but not limited to, changes in observed and forecasted house price appreciation, its market share, the effect of legislative and regulatory developments and new accounting guidance, the credit quality of loans the company owns or guarantees, the costs and benefits of the company’s CRT transactions, the effects of natural disasters, other catastrophic events, and significant climate change effects and actions taken in response thereto on its business, 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, changes in the fiscal and monetary policies of the Federal Reserve, and the impacts of legislation or regulations and new or amended accounting guidance, that 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, 2022, 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.