On July 31, 2024, Federal Home Loan Mortgage Corp (FMCC, Financial) released its 8-K filing for the second quarter of 2024. The company, a US-based government-sponsored enterprise, invests in mortgage loans and mortgage-related securities, operating primarily in the Single-family and Multifamily segments.
Financial Performance Overview
Federal Home Loan Mortgage Corp (FMCC, Financial) reported net income of $2.8 billion for Q2 2024, marking a 6% decrease year-over-year. This decline was primarily driven by a credit reserve build in the current period compared to a credit reserve release in the prior year period, partially offset by higher net revenues. Net revenues for the quarter stood at $6.0 billion, a 12% increase year-over-year, driven by higher net interest income and higher non-interest income.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Income | $2.8 billion | $3.0 billion | -6% |
| Net Revenues | $6.0 billion | $5.4 billion | +12% |
| Net Interest Income | $4.9 billion | $4.5 billion | +9% |
| Non-Interest Income | $1.1 billion | $0.85 billion | +29% |
| Provision for Credit Losses | $0.4 billion | -$0.5 billion | N/A |
Segment Performance
The Single-family segment reported net revenues of $5.1 billion and net income of $2.3 billion, while the Multifamily segment reported net revenues of $0.9 billion and net income of $0.5 billion. The Single-family segment's performance was bolstered by higher net interest income and non-interest income, while the Multifamily segment faced challenges due to higher delinquency rates and less favorable fair value changes from spreads.
Business Highlights
Federal Home Loan Mortgage Corp (FMCC, Financial) financed 257,000 mortgages in Q2 2024, with 53% of eligible loans affordable to low- to moderate-income families. Additionally, the company financed 92,000 rental units, with 93% of eligible units affordable to low- to moderate-income families. The serious delinquency rate for the Single-family segment decreased to 0.50%, while the Multifamily segment saw an increase in the delinquency rate to 0.38%.
Market Liquidity and Portfolio
The company provided $96 billion in market liquidity and maintained a total mortgage portfolio of $3.5 trillion. New business activity increased to $85 billion, up from $83 billion in Q2 2023. The mortgage portfolio grew by 2% year-over-year, reaching $3.1 trillion.
Commentary
"Freddie Mac continued to deliver steady results in a housing market characterized by relatively high mortgage rates and muted home sales. The company remains focused on helping families purchase or rent a place to call home." - Michael T. Hutchins, President and Interim Chief Executive Officer
Conclusion
Federal Home Loan Mortgage Corp (FMCC, Financial) demonstrated resilience in Q2 2024 despite challenges posed by credit reserve builds and a high-interest-rate environment. The company's focus on providing liquidity and supporting affordable housing remains evident through its financing activities and portfolio growth. Investors and stakeholders are encouraged to review the full 8-K filing for a comprehensive understanding of the company's financial performance and strategic direction.
Explore the complete 8-K earnings release (here) from Federal Home Loan Mortgage Corp for further details.
