Freddie Mac announces mixed bag in Q2 financial results

"Deterioration in forecasted economic conditions" has an impact on results

Freddie Mac announces mixed bag in Q2 financial results

US mortgage giant Freddie Mac has shared its financial results for the second quarter of 2022.

Among the key highlights of the results release, the government-sponsored enterprise noted that its net income was $2.5 billion in the second quarter, a 33% plunge from the same period last year and down from $3.80 billion in the first quarter.

Freddie said the decrease was primarily driven by a provision for credit losses of approximately $300 million in Q2 due to “portfolio growth and deterioration in forecasted economic conditions.”

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The mortgage giant’s net worth was up from $31.7 billion in Q1 to $34.1 billion in Q2. Its total mortgage portfolio stood at $3.3 trillion. Continued mortgage portfolio growth and higher guarantee fees helped keep net interest income steady at $4.8 billion. However, non-interest income tumbled by $1.1 billion, leading to an 8% year-over-year decline in net revenues ($5.4 billion).

The GSE reported a net income of $2.2 billion in its single-family business and $0.3 billion in its multifamily business. New business activity in Freddie Mac single-family slowed 52% year over year to $138 billion as refinances declined significantly due to higher rates. Meanwhile, multifamily new business activity was up 15% year over year to $15 billion.

“In the second quarter, Freddie Mac achieved solid financial results and continued to build equity to withstand potential economic stress,” said Freddie Mac CEO Michael DeVito. “We helped 617,000 families buy, refinance, or rent a home and introduced innovations which allow lenders to simplify the loan underwriting process and improve risk management. As rising mortgage rates, house price appreciation, and other economic factors challenge affordability, we are committed to working across the industry to promote equity and sustainable housing nationwide.”

Fannie Mae also recently released its second quarter financial results. It revealed $4.7 billion net income, a $245 million gain from the first quarter. The firm’s net worth reached $56.4 billion.

“Our solid second quarter results enhance our financial strength, and we remain focused on both managing risk and serving our mission to provide sustainable and affordable financing for the benefit of renters and homeowners,” said David Benson, president and interim CEO of Fannie Mae.