8-K: Freddie Mac Reports $2.8 Billion Net Income for Q1 2025, Aiding Over 313,000 Households

Freddie Mac announced a net income of $2.8 billion for the first quarter of 2025, supporting housing for 313,000 households.

Summary

• Freddie Mac reported a net income of $2.8 billion for Q1 2025, a 1% increase year-over-year.
• Net revenues increased by 2% to $5.9 billion, driven by higher net interest income.
• The company financed 224,000 mortgages, with 51% being affordable to lowto moderate-income families.
• First-time homebuyers represented 52% of new single-family home purchase loans.
• Freddie Mac also financed 89,000 rental units, with 92% affordable to lowto moderate-income families.
• New business activity reached $78 billion, up from $62 billion in Q1 2024.
• The total mortgage portfolio grew to $3.6 trillion, a 3% increase year-over-year.
• The serious delinquency rate was 0.59%, unchanged from the previous quarter but up from 0.52% year-over-year.
• The company completed approximately 25,000 loan workouts.
• Net worth increased to $62.4 billion as of March 31, 2025.
• The liquidation preference of the senior preferred stock increased to $132.2 billion on March 31, 2025 and will increase to $135.1 billion on June 30, 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the increase in net income and revenues, as well as the company's efforts to support affordable housing. However, there are some concerns regarding delinquency rates and non-interest income.

Positives

• Net income increased by 1% year-over-year to $2.8 billion.
• Net revenues increased by 2% year-over-year to $5.9 billion.
• New business activity increased to $78 billion, up from $62 billion in Q1 2024.
• The mortgage portfolio grew to $3.6 trillion, a 3% increase year-over-year.
• Credit enhancement coverage of the Single-Family mortgage portfolio increased to 62%.

Negatives

• Non-interest income decreased by 25% year-over-year, primarily due to lower net investment gains in Multifamily.
• The serious delinquency rate increased from 0.52% to 0.59% year-over-year.
• Multifamily net income decreased by 35% year-over-year.
• Multifamily net revenues decreased by 27% year-over-year.
• The Multifamily delinquency rate increased to 0.46% at March 31, 2025, from 0.34% at March 31, 2024.

Risks

• Changes in economic and market conditions could impact future results.
• Actions by the U.S. government, including FHFA, Treasury, and Congress, could affect the company.
• Changes in fiscal and monetary policies of the Federal Reserve could influence performance.
• Downgrades in credit ratings could have adverse effects.
• Legislative or regulatory changes and new accounting guidance could impact results.

Future Outlook

The press release contains forward-looking statements regarding the conservatorship, expectations for Single-Family and Multifamily segments, efforts to assist the housing market, liquidity and capital management, and economic and market conditions.

Management Comments

• William J. Pulte, Director, U.S. Federal Housing and Chair of the Board of Directors, Freddie Mac, stated that the company earned $2.8 billion of net income in the first quarter, driving the company's net worth to $62 billion.
• He also mentioned that FHFA is working with Freddie Mac to streamline its operations, supporting mortgage affordability and building a safer, sounder Freddie Mac.

Industry Context

Freddie Mac's results reflect the current housing market conditions, including interest rate fluctuations and house price appreciation. The company's focus on affordable housing aligns with broader industry goals of promoting housing equity and stability.

Comparison to Industry Standards

• Freddie Mac's delinquency rates can be compared to those of other government-sponsored enterprises (GSEs) like Fannie Mae, as well as private mortgage insurers and banks.
• The report mentions that the Multifamily delinquency rate for FDIC insured institutions (90+ day) was 0.96% as of December 31, 2024, while Freddie Mac's Multifamily delinquency rate (60+ day) was 0.46% as of March 31, 2025.
• The report also mentions that the MF CMBS market (60+ day) delinquency rate was 1.97% as of March 31, 2025.

Stakeholder Impact

• Shareholders will be impacted by the financial performance of the company.
• Employees are affected by the company's operational efficiency and strategic direction.
• Customers (homebuyers and renters) benefit from the company's efforts to promote affordable housing.
• The housing market benefits from Freddie Mac's role in providing liquidity and stability.

Next Steps

• Management will host a conference call on May 1, 2025, to discuss the results.
• The company will continue to focus on supporting the housing market and managing its capital and liquidity.

Key Dates

Keywords

Freddie Mac, Financial Results, Mortgage, Net Income, Revenues, Delinquency Rate, Housing Market, Conservatorship, Single-Family, Multifamily