8-K: Freddie Mac Reports Strong 2024 Results, Driven by Higher Net Revenues

Freddie Mac announced a net income of $3.2 billion for the fourth quarter of 2024 and $11.9 billion for the full year, fueled by increased net revenues and supporting 1.6 million households.

Summary

• Freddie Mac reported a net income of $3.2 billion for the fourth quarter of 2024, an 11% increase year-over-year.
• This increase was primarily driven by higher net revenues, which reached $6.3 billion, an 18% increase year-over-year.
• The full-year 2024 net income was $11.9 billion, a 13% increase compared to the previous year.
• Full-year net revenues totaled $23.9 billion, up 13% year-over-year.
• The company financed 1.0 million mortgages in 2024, with 53% of eligible loans affordable to lowto moderate-income families.
• First-time homebuyers represented 52% of new single-family home purchase loans.
• Freddie Mac also financed 553,000 rental units, with 93% of eligible units affordable to lowto moderate-income families.
• New business activity for the fourth quarter was $100 billion, up from $73 billion in the fourth quarter of 2023.
• The total mortgage portfolio reached $3.6 trillion, a 3% increase year-over-year.
• The serious delinquency rate increased to 0.59%, up from 0.55% at the end of 2023.
• The liquidation preference of the senior preferred stock increased to $129.0 billion on December 31, 2024.
• The liquidation preference of the senior preferred stock will increase to $132.2 billion on March 31, 2025.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results and a focus on supporting affordable housing. While there are some concerns about delinquency rates, the overall tone is optimistic.

Positives

• Freddie Mac's net income and net revenues increased significantly year-over-year for both the fourth quarter and the full year.
• The company facilitated homeownership and rental opportunities for 1.6 million households.
• A significant portion of the loans and rental units financed were affordable to lowto moderate-income families.
• New business activity increased substantially, indicating strong demand for Freddie Mac's services.
• The mortgage portfolio continues to grow, reflecting the company's role in the housing market.
• Credit enhancement coverage of the Single-Family mortgage portfolio increased to 62% at December 31, 2024, up from 61% at December 31, 2023.
• Multifamily net income of $2.5 billion, up 67% year-over-year.
• Multifamily net revenues of $4.1 billion, up 38% year-over-year.

Negatives

• The provision for credit losses increased in Q4 2024 compared to a benefit in Q4 2023.
• The serious delinquency rate increased slightly, indicating potential credit quality concerns.
• The Multifamily delinquency rate increased to 0.40% at December 31, 2024, from 0.28% at December 31, 2023.

Risks

• Changes in economic and market conditions could impact future performance.
• Actions by the U.S. government and regulatory bodies could affect Freddie Mac's operations.
• Changes in fiscal and monetary policies of the Federal Reserve could influence mortgage rates and housing market activity.
• The impact of banking crises or failures could affect Freddie Mac's business.
• Natural disasters or catastrophic events could negatively impact the company's financial condition.
• The company is still operating under conservatorship.

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, economic and market conditions, and the impact of legislative and regulatory developments.

Management Comments

• Diana W. Reid, Chief Executive Officer, stated that Freddie Mac delivered $411 billion of liquidity into the U.S. housing finance system, helping 1.6 million families buy, refinance, or rent a home in 2024.
• She also thanked Freddie Mac's committed staff and lenders for making the outcome possible.

Industry Context

Freddie Mac's results reflect the overall health and activity in the U.S. housing market, influenced by factors such as mortgage rates, home prices, and economic conditions. The company's performance is indicative of the broader trends in the mortgage and housing finance industry.

Comparison to Industry Standards

• It is difficult to compare Freddie Mac directly to other companies due to its unique role as a government-sponsored enterprise (GSE).
• However, its performance can be benchmarked against other mortgage lenders and financial institutions.
• For example, comparing Freddie Mac's delinquency rates to those of FDIC-insured institutions and the MF CMBS market provides insights into its credit risk management.
• The report mentions that the Multifamily delinquency rate for FDIC insured institutions is as of September 30, 2024 (latest available information).

Stakeholder Impact

• Shareholders will likely view the strong financial results positively.
• Employees can be encouraged by the company's success and its role in supporting the housing market.
• Customers (lenders and borrowers) benefit from Freddie Mac's liquidity and affordable housing initiatives.
• Suppliers and creditors can be confident in the company's financial stability.

Next Steps

• Management will host a conference call on February 13, 2025, to discuss the results.
• The company will continue to focus on supporting the housing market and managing credit risk.
• The liquidation preference of the senior preferred stock will increase to $132.2 billion on March 31, 2025.

Key Dates

Keywords

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