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May 08, 2014

Five Ways Freddie Mac Is Supporting the Market and Strengthening the Industry

Donald H. Layton
Donald H. Layton, CEO

This week, Freddie Mac reported strong first quarter 2014 financial results, which marks our 10th consecutive quarter of profitability. Net income was $4.0 billion and comprehensive income was $4.5 billion - which means that we'll be returning an additional $4.5 billion to taxpayers in June.

This brings the total we've returned to taxpayers to more than $86 billion, $15 billion more than our cumulative draws from the Treasury.

Our results also reflect the progress we’ve made in Conservatorship to support the U.S. mortgage market, while building a better company, in ways that benefit families and communities, taxpayers and mortgage lenders of all sizes. This is a commitment we take very seriously.

Here are five ways we did just that in the first quarter of 2014.

  1. Funding homes and apartments. In the first quarter alone, we helped almost 250,000 families buy or refinance a home and funded more than 50,000 apartments – and the vast majority of the latter were affordable to families at or below the local area median income. This is very important in today's economic environment. Since 2009, we have helped more than 11.6 million families buy, refinance or rent a home.
  2. Helping struggling homeowners. We continued to deliver on our work to help struggling borrowers – we helped another 65,000 in the first quarter through our loss mitigation programs and the Home Affordable Refinance Program. While this is less than previous quarters, it is good news as it is the result of lower volumes of delinquent loans.
  3. Shifting credit risk. We are focused in various ways on reducing taxpayer exposure to the risk of our balance sheet. We have become the leader in laying off first or near-first loss risk onto private capital in both the multifamily business, through our signature K-Deal structure, and in the single-family business, through the innovative STACR® and reinsurance transactions. Through these initiatives, we've now laid off substantial credit risk on approximately $165 billion of single-family and multifamily mortgages. The long-term goal of all these innovative credit risk transfer programs is to continually increase the portion of risk associated with new single-family and multifamily flow that is laid off to private capital.
  4. Reducing taxpayer exposure. In addition to shifting risk to the private market, we have also begun to dispose of legacy assets after developing the financial technology to ensure we are doing so with proper taxpayer economics in mind. On that basis, we sold more than $19 billion of securities in 2013 and during the first quarter of this year. Other legacy asset classes are also being worked on for disposition – such as our securitizing re-performing loans that previously were purchased upon 120 days past due delinquency from earlier securitization pools.
  5. Becoming more effective and efficient. Improving how much and how well we support the mortgage market is another of our top priorities. We have expanded the quality and breadth of our services for single-family lenders, particularly middle-sized lenders. Thanks to these and other efforts, our customer service measures are improving as we seek to help lenders do their jobs better – which ultimately helps the homeowner.

    We are also working on becoming world-class in many of the key skills needed to run a large financial institution well – things like customer service, capital management, overall risk management, information technology, and expense efficiency.

So all in all, we continue to make very good progress at Freddie Mac. The work we do each and every day not only serves families and communities nationwide, it also ensures the future mortgage finance system will be safer and stronger. I look forward to updating you again next quarter.

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