Freddie Mac Reports Lower Earnings for 2022
Written By: Joel Palmer, Op-Ed Writer
After delaying its latest earnings report by a week, Freddie Mac reported declines in net income for the fourth quarter and full-year of 2022.
Freddie reported net income of $1.8 billion for the fourth quarter, a 36 percent decrease year-over-year, which the company said was driven by lower net revenues and a credit reserve build in its single-family business.
The company’s $4.8 billion in revenue for the quarter was down 13 percent compared with the fourth quarter of a robust 2021.
For the full year, Freddie Mac booked net income fo $9.3 billion, 23 percent less than its 2021 results. Net revenues were off only 3 percent, ending the year at $21.3 billion.
"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,” said Freddie Mac CEO Michael J. DeVito.
“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.”
Freddie’s single-family new business activity totaled $75 billion in the fourth quarter, a sharp decrease of 72 percent year-over-year. Freddie’s single-family activity has fallen each of the last four quarters, from $271 billion in the fourth quarter of 2021 to $75 billion in the most recent quarter.
Full-year new business in the single-family market was $541 billion, a decline of 56 percent from 2021. Freddie attributed the lower numbers to a slowdown in refinance activity due to rising mortgage interest rates.
The value of Freddie’s overall single-family mortgage portfolio increased 7 percent to $3 trillion, driven by an increase in the average portfolio loan size and a higher share of single-family mortgage debt outstanding.
Single-family net income was reported at $1.5 billion for the fourth quarter, down 33 percent from the previous year; and $7.9 billion for the year, down 10 percent from 2021.
In all, Freddie Mac financed 1.8 million mortgages, with 58 percent of eligible loans being affordable to low- to moderate-income families, and enabled 444,000 first-time homebuyers to purchase a home.
Multi-family activity rose from 2021 to 2022, both for the fourth quarter and full year. Quarterly activity was $29 billion, up 16 percent year-over-year. Full-year activity totaled $73 billion, up 4 percent. Higher results were driven by a larger loan purchase cap available during 2022, the company said.
Freddie’s multi-family mortgage portfolio ended 2022 valued at $429 billion, up 3 percent from 2021.
Multifamily net income totaled $300 million for the fourth quarter, a decline of 48 percent, and it was $1.4 billion for the year, down 57 percent.
Freddie Mac increased its net worth to $37 billion as of the end of 2022. Freddie Mac was not required to pay a dividend to Treasury on its senior preferred stock. The current Enterprise Regulatory Capital Framework will not require a dividend payment until the GSEs have built sufficient capital to meet its capital requirements.
About the Author
As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
