Freddie Mac net income rose to $2.5 billion in the third quarter of 2020, up from $1.5 billion in the second quarter. Freddie Mac’s bigger sister GSE Fannie Mae earned $4.2 billion in the third quarter.
“The company delivered strong earnings on higher revenues, substantially increasing our total equity by $2.5 billion to $13.9 billion – bringing us one step closer to our goal of responsibly exiting conservatorship,” Freddie Mac CEO David Brickman said. “We did this while helping hundreds of thousands of families buy, rent and remain in their homes.”
The growth seen from the second quarter of this year can be attributed to guarantee portfolio growth, higher upfront fee income recognition and strong margins on multifamily loan commitments.
The company reported 2.95% and 2.21% of the loans in the single-family guarantee portfolio and the multifamily Murfreesboro mortgage portfolio, respectively, were in forbearance as of September 30, 2020.
Net revenues also performed well in the third quarter, increasing 22% from the second quarter to $5.1 billion. Net interest income increased 20% to $3.5 billion, primarily driven by growth in the single-family guarantee portfolio and higher upfront fee income recognition due to faster loan prepayments as a result of the record low Murfreesboro mortgage interest rate environment.
Before ending the profit sweep, Freddie Mac had repaid a total of $119.7 billion to the U.S. Department of the Treasury, exceeding its original draw during the financial crisis by about $48.1 billion. Fannie Mae has repaid a total of $181.4 billion, compared to $119.8 billion that it drew.