Freddie Mac turns a profit in first quarter
Freddie Mac reported net income of $676 million in the first quarter, one year removed from a $6.6 billion loss. The government-sponsored enterprise did not request a draw from the Treasury Department in the quarter. It's the fourth period the mortgage giant did not request funds since it entered conservatorship in 2008. Since then, it has received $64.7 billion from the government. Freddie paid $11.6 billion in dividends back to the Treasury so far, including $1.6 billion in the first quarter. However, Freddie said it expects to request additional draws, determined by a variety of factors such as home prices, interests rates, security prices and spreads. Despite the first-quarter profit, Freddie said weaknesses in the U.S. mortgage and credit markets continue to impact business. Home prices fell 2.8% nationwide over the quarter, based on the company's own home price index. "We made further progress on our company-wide efficiency initiatives this quarter, continuing the solid trend of cost savings that began early last year," said Freddie Mac CEO Charles "Ed" Haldeman. Freddie funded one out of every four home loans originated during the first quarter. The unpaid principal balance on Freddie's nonperforming assets totaled $124.4 billion, up from $117.2 billion one year ago. But it dipped from $125.4 billion at the end of last year due to a slower rate of loans transitioning into serious delinquency, Freddie said. Freddie's single-family delinquency rate fell to 3.63% at the end of the first quarter from 3.84% at Dec. 31. The GSE reported $2 billion in provision for credit losses, down from $3.1 billion in the previous quarter. The action came from fewer delinquent loans flowing into the portfolio and a slower rate at which these troubled mortgages ultimately took a loss. "Our outlook remains cautious," Haldeman said. "Continued improvements on the employment front and in early-stage delinquencies were positive signs during the quarter, but we believe large inventories of unsold homes and a high number of distressed sales will continue to put downward pressure on home prices in many neighborhoods." Write to Jon Prior. Follow him on Twitter @JonAPrior.