Executive Perspectives Blog
Freddie Mac's innovative credit risk sharing initiatives are not only getting traction with investors but have received significant praise from an influential and respected publication, Euromoney. Our inaugural Structured Agency Credit Risk (STACR®) debt notes recently earned Euromoney's Global Structured Deal of the Year for 2013. This is the premier award for structured capital transactions in the global capital markets.
It has been more than seven years since the beginning of the deepest housing recession since the Great Depression. As housing activity fell, nervous speculation took off in the media and industry about when (if ever) housing would get back to normal. Given the pickup in sales, new construction, and home values over the past couple of years, it’s fair to ask if we’re there yet: is the U.S. housing market back to a normal range of activity with a good balance between demand and supply forces?
Significant debate around multifamily housing policy focuses on the question of whether the federal government should support affordable multifamily rental housing and, if so, how the government should encourage private capital to flow toward it. While important, that question tends to overshadow the equally important, but more nuanced, question of what the need is for affordable housing, how to help meet it most effectively, and what trade-offs come with choosing one policy approach over another. The definition of what an affordable housing unit is, and what makes any given unit affordable – the rent level, tenant, or income level in the surrounding area – is central to the answer.
This week, Freddie Mac reported its fourth quarter and full-year 2013 financial results. Net income totaled $48.7 billion and comprehensive income was at $51.6 billion – both records for the company. The quarter was also a record for pre-tax income at $8.6 billion and marked our ninth consecutive quarter of positive earnings. However, it's important to note that our results included several legacy items that were strongly favorable in 2013, such as legal settlements, but it is our expectation that such items will be considerably smaller in 2014.
Without lender and investor trust in the quality of mortgage data and underwriting, credit for buying homes or refinancing existing loans would probably dry up. Today the mortgage industry faces the challenge of increasing the speed, transparency, and consistency of efforts aimed at improving mortgage quality and striving to keep it at that higher level across the entire housing cycle.