Freddie MacNet income for the second quarter slipped to $2.5 billion, a 33% year-over-year decline, as it grapples with the mortgage industry’s vulnerability to swings in interest rates. ‘interest.
Freddie Mac net income for the year so far it has fallen to $6.3 billion from $6.4 billion in 2021. But while Freddie Mac’s net profit was down from the $3.8 billion in the first quarter, the company has consistently generated more year-to-date revenue compared to last year. . Freddie Mac saw $11.3 billion in the first six months of 2022, up from $11.1 billion last year at this time.
The smaller of the two government-sponsored companies now has a net worth of $34.1 billion, down from $31.7 billion in the previous quarter and $22.4 billion at the end of June 2021. US Treasurywhich owns a majority stake in Freddie Mac, and the Federal Housing Finance Agencyits custodian, allowed the GSEs to keep their profits from 2019.
The Federal ReserveThe government’s efforts to rein in inflation have been devastating for mortgage companies that were banking on relatively low or stable mortgage rates. The rate on a thirty-year home loan was 3.01% at the end of September 2021, and this week reached 5.3% according to the latest Freddie Mac survey.
For GSEs, rapidly falling rates can pose a challenge during the period between consolidating loans from lenders and selling them to investors. Multi-family loans take longer than single-family loans to aggregate and then sell to investors, making this business more vulnerable to widening spreads.
But the GSE’s single-family hedging strategy has partly mitigated the fallout from the rapid decline in rates.
Freddie Mac Updates Industry Risk Mitigation Requirements Due to Elevated Cybersecurity Threats
As the mortgage world becomes increasingly technologically interconnected, cybersecurity, data and infosecurity risks increase. These risks should be a priority for mortgage professionals, as evidenced by recent changes at Freddie Mac that emphasize risk mitigation and cybersecurity efforts.
Presented by: FundingShield
Higher gains on single-family homes partially offset a $410 million, or 82%, year-over-year decline in gains on multi-family investments. In the second quarter of 2022, Freddie Mac reported $321 million in investment gains, compared to $636 million in the second quarter of 2021, a decline of 49%.
Freddie Mac bought $138 billion in single-family home refinances and mortgage purchases in the quarter, compared to $207 billion in the prior quarter. Almost two-thirds – 62% – of loans acquired by Freddie Mac in the second quarter were purchase mortgages, compared to 45% in the first quarter. Total refinances for the Freddie Mac purchase fell sharply to $52 billion from $114 billion in the prior quarter.
The average loan size for single-family mortgages that the GSE acquired in the second quarter of 2022 was $294,000, compared to $300,000 in the first quarter.
Guarantee fees charged by Freddie Mac rose to 52 basis points from 49 in the previous quarter, mainly due to higher credit charges on certain high-balance loans and second homes that it began charging in April .
During the earnings call announcing the results, CEO Michael DeVito touted the company’s initiative to encourage landlords to report lease payments on time. According to DeVito, 77,000 tenant households from more than 800 multi-family properties participated.