Freddie Mac posted a net income of $2.1 billion for the third quarter 2014, marking the twelfth consecutive quarter of positive earnings. This is compared to $1.4 billion in second quarter of 2014.
Comprehensive net income came in at $2.8 billion, significantly up from $1.9 billion in the second quarter of 2014.
Meanwhile, Fannie Mae also reported on Thursday, posting a net income of $3.9 billion for the third quarter of 2014 and comprehensive income of $4 billion.
“The fundamentals of our business continued to improve, and the quarter ended with the lowest single- family seriously delinquent rate in more than five years. Our work to become a more competitive company is bearing fruit in increased customer satisfaction and market share between the GSEs,” said Freddie Mac CEO Donald Layton.
“We also strongly delivered on our mission to be one of the leading sources of liquidity in the market, funding approximately one in four home loans and nearly 214,000 units of rental housing in the first nine months of 2014.”
The improvement in the third quarter was primarily driven by 4 items:
- Higher net interest income of $3.7 billion versus $3.5 billion in second quarter.
- Lower derivative losses of $0.6 billion versus $1.9 billion in second quarter.
- Higher income from legal settlements on private-label securities of $1.2 billion versus $0.4 billion in ?second quarter.
- A shift to credit provision of $0.6 billion from $0.6 billion credit benefit in second quarter.
Based on its Sept. 30, 2014 net worth of $5.2 billion, Freddie’s December 2014 dividend obligation will be $2.8 billion, bringing total cash dividends paid to Treasury to $91.0 billion. Senior preferred stock held by Treasury remains $72.3 billion, as dividend payments do not reduce prior Treasury draws.
“At the same time, we are working with FHFA and the industry to strengthen and modernize the housing finance system,” Layton added.
“We’re doing this by upgrading critical infrastructure, providing our customers with greater certainty through, as one example, refined representation and warranty terms, and also reducing taxpayer exposure through credit risk sharing transactions and the efficient liquidation of several types of legacy assets," he added. "These innovations will benefit millions of homebuyers and renters as well as taxpayers today and in the future.”
In addition, Freddie has provided $2.4 trillion of liquidity to the mortgage market, including $201 billion in the first nine months of 2014. This also included 8.1 million refinancings (nearly 439,000 in the first nine months of 2014), and 2.5 million home purchases (over 445,000 in the first nine months of 2014).