On February 14, 2024, Federal Home Loan Mortgage Corp (FMCC, Financial) released its 8-K filing, revealing a significant increase in net income for both the fourth quarter and the full year of 2023. The government-sponsored enterprise, which plays a pivotal role in the U.S. housing market by investing in mortgage loans and mortgage-related securities, reported a net income of $2.9 billion for Q4, a 65% increase from the same period in the previous year. The full-year net income also rose to $10.5 billion, marking a 13% year-over-year growth.
FMCC operates primarily through its Single-family and Multifamily segments, with the majority of its revenue stemming from the Single-family segment. This segment focuses on providing liquidity and support to the single-family mortgage market, while the Multifamily segment invests in loans for aggregation and securitization through various products, including multifamily K Certificates.
Financial Performance and Market Impact
The company's financial achievements are particularly noteworthy given the challenges faced in the housing market, including higher mortgage interest rates which have impacted home purchase and refinance activity. Despite these headwinds, FMCC's net revenues increased by 11% year-over-year to $5.4 billion in the fourth quarter, driven by higher net interest income and non-interest income. The benefit for credit losses of $0.5 billion, primarily due to a credit reserve release, also contributed to the strong performance.
FMCC's mortgage portfolio growth reflects its continued commitment to providing liquidity to the housing market. The portfolio reached $3.0 trillion, a 2% increase from the previous year. This growth, although moderate, signifies the company's resilience in a challenging economic environment. The serious delinquency rate improved to 0.55%, down from 0.66% at the end of 2022, indicating a healthier mortgage portfolio.
Supporting Affordable Housing and First-Time Homebuyers
FMCC's mission to make home possible for families across the nation was evident in its financing of 955,000 mortgages, with a significant portion being affordable to low- to moderate-income families. The company also enabled 375,000 first-time homebuyers to purchase a home, setting a new milestone for its support of first-time homeownership.
"In 2023, Freddie Mac delivered on its mission, achieved solid financial results, and meaningfully increased its net worth. The company helped more than 1.4 million families buy, refinance, or rent a home, and worked with lenders to reach more borrowers in underserved areas," said Michael J. DeVito, Chief Executive Officer of Freddie Mac.
FMCC's commitment to affordable housing is further underscored by its financing of 447,000 rental units, with the vast majority being affordable to low- to moderate-income families. This focus on affordability is crucial for the sustainability of the housing market and for meeting the needs of the broader community.
Looking Ahead
As FMCC continues to operate under conservatorship, the company's financial health remains a priority. With a net worth of $47.7 billion and the ability to maintain access to debt markets and liquidity, FMCC is well-positioned to continue its mission of stabilizing and supporting the U.S. housing market. The company's strategic decisions and financial results reflect its adaptability and commitment to its core objectives, despite the challenges posed by economic and market conditions.
For more detailed information on FMCC's financial results and strategies, investors and interested parties are encouraged to review the full earnings report and supplementary materials available on the company's website.
Value investors and potential GuruFocus.com members seeking to understand the implications of FMCC's financial results can find comprehensive analysis and insights on GuruFocus.com, where the complexities of the housing market and mortgage investment are made accessible.
Explore the complete 8-K earnings release (here) from Federal Home Loan Mortgage Corp for further details.
