FMCC - Earnings call 1 2023 | Federal Home Loan Mortgage Corporation

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Jeffrey Markowitz

Thank you for joining us for a presentation of Freddie Mac's First Quarter 2023 Financial Results.

I'm Jeff Markowitz, Deputy CIO and SVP of External Affairs and Corporate Communications. We're joined today by our CEO, Michael DeVito, and by our CFO, Chris Lown.

Before we begin, we'd like to point out that during the call, Mr. DeVito and Mr. statements and assumptions other forward-looking key the make drivers business factors. may based about on company's Lown Changes in these results to factors could cause vary its the from expectations. materially company's actual the today. those be factors A report description filed found of in XX-Q on company's can quarterly

XX-Q, release and the the posted related press of section Relations freddiemac.com. earnings find materials on You'll Investor

call recorded, and be available ask We freddiemac.com. call is a not be This that or rebroadcast transcribed. on replay will the soon

CEO, the With over call Michael that, Mac's DeVito. Freddie turn I'll to

Michael DeVito

and to morning, joining on on the first topics: to Good affordability we've you thank our going and opportunities market results. housing views stability actions and quarter for continues financial pursue review as taken positive Today, call liquidity, Mac forward. to the our cover impact to economic environment, I'd promote like three Freddie

our with economy. start view on overall the Let's

elevated see and recession We two an largely the months drive factors continue risk that outlook. next XX of to over

cooling, target. well remains above inflation some latest the according First, was Reserve's figures. the X% X.X% to year-over-year Despite core Federal inflation

in the banking lending some estate real The uncertainty multifamily elevated. March in construction. remains to of and disruption risk caused credit sector tightening Secondly,

be XX-year expected. bright market close the labor continues remained at low a to stronger unemployment On to of the X.X%. rate than side, The

Although million added we've X.X job we jobs have months growth XX.X the is XXXX pandemic, million slowing, recovered lost early the not only of from the more.

observers conditions renters. continue that For will are the expected financial homebuyers and rates other GDP be affect and tightening on affecting with economy, to XXXX a Higher growth. overall agree we to are drag likely

we is but November high significantly fixed full a Our point still the higher ago. higher of at more primary lower mortgage X%. XX-year shows rates, X%, to That to XXXX XXXX opportunities. the the quarter. had in Due survey or a year XX% of quarter acquisitions than see of percentage than just nearly well the in than loan market That Refinances in our showed our most first or been volume. refinancing billion $X.X up compared billion quarter acquisition first $XXX recent XX% over fewer

why rising existing fixed below to rates X that are about the lock and consider effect, X less with understand in To consider selling X%. likely existing rates Due mortgages rate homeowners homeowners matter, to have locked and moving.

listings ongoing XX% XXXX. February X-year supply new almost fact, aggravating in to are to average the the In These declined compared issue. XXXX factors prepandemic,

more fewer up millions deficit the While XXXX, believe a you new below delinquencies completions financial remained has Factor country after some construction why in housing of constrain remain of pre-global crisis supply, moderation. see even to and elevated levels. affordable still markets prices migration to and homes. picked in have We house can

For last and fall, example, February prices modestly in were up March. but fell month-over-month

possibly XX equity term, to XX decline. weather the and $XX roughly subsequent prices roughly Most additional collectively Longer will over since months accumulated X.X% X.X% that U.S. the this next They have XXXX. trillion homeowners months. over we fall forecast in house another the capacity have

earning $X advance environment. mission quarter, with significant our industry banking had Let we billion me some earnings of disruption. or taken actions turn our a from the to in the balance have no impact this We sheet to recent solid to

Treasury's to transfer us renters. Urban and Fund million Housing enabled to borrowers than Capital lower-income Housing Fund Trust $XXX benefit and earnings Development's Our to and more Magnet

to net our increased $XX.X also earnings more billion worth by Solid than billion. $X

before there enabled country. serve and across when recent credit respect these the us to we've enterprise, soundness our result us the and of XX that. also be mission quarter crisis to be the to struck natural pandemic performance risk. safety taken on with past focus to a steps of stabilizing banking particularly families and during enabled force That's was for Our partly during the our years the disasters the It's

first the purchased billion XX% acquired XX,XXX we liquidity loans, refinance XXX,XXX XX% down quarter, down $XX year-over-year; year-over-year. the of purchase to delivered loans, market; In

first-time historical moderate below eligible families rising XX%, to loan median in to to the help financed than XXX% homes. fact, low of In highs and XX,XXX apartments homebuyers, or share income XX,XXX close affordable of at keep workouts distressed with renters and at completed helped their area income XX% of more owners

All even done sustainable and opportunities that greater in to environment. much said, be those this more to bring we uncertain know work exist And affordable there is housing. to economic access

rates, There refinancing. price. homeownership. afford still still to let for There much to higher could benefit are reasons homebuyers For rates example, and the equitable create mortgage-ready market, median with me loan still Even housing highlight there work are home of millions do to is there are higher still who initiatives. with opportunities now a potential more interest refinance. who from could three homeowners are And there a near

down traditionally purpose First, we're help buying purpose lenders terms as their gap. Special from programs. credit an tool currently homeownership with payment important or for own underwriting credit and underserved can assistance, to enable loans the be lenders pricing such to special offer special programs close borrowers credit

purpose Access, Freddie dozen out across Mac's cities with BorrowSmart lenders. rolled special credit participating we program, a XX Second, nearly

more those down the nearly XXX assistance payment Mac than down XXX assistance payment for anywhere Freddie seeking resource, country, DPA One, contains in payment now down information existing lenders broadly, our More online programs. on and

to our opportunities, you these rental of affordable we're things and on find homeownership can information other updated doing you sustainable freddiemac.com. and all in interested support For many those of

to financial our With results. to Lown, Chris turn review CFO, our I'll that,

Christian Lown

driven fair the net prior build was you, a quarter. year quarter credit reserve this earned a versus and by Thank reserve This income morning. in release or of gains billion . We a and this of $X quarter, credit decline Michael, value decline billion, $X.X lower year-over-year. good primarily XX%,

$X.X increase and interest a guarantee the net rate. of was fee result income increase, portfolio in a single-family growth First basis a the XX% quarter billion, single-family average point in X mortgage year-over-year X%

from deferred to higher positive income. offset were slower rates interest lower higher increase investment income Higher partially resulting benefiting These due rates. interest drivers from by the contributed prepayments recognition, income mortgage to net also in fee

the investment family. a forward net quarter sales gains income the $X.X primarily we $XXX the year, first single first was mortgage-related Noninterest for million, in quarter, of guaranteed large from due from of recorded securities. gains decline in year billion quarter down prior last to In

Our year to a provision estimated modest of this quarter, reserve driven improvement builds $XXX was forecast for segments reserve million million losses prices an and conditions. house $XXX in by credit for in the a release prior business primarily credit of benefit to was for due compared higher the result quarter, credit which both economic

end $X.X was of Our quarter total a year-over-year. X% the portfolio trillion, increase this mortgage at

X% for net the Net year-over-year. $X.X $X.X mortgage points. year-over-year Single-Family down billion The up XX income XX% fee income prior XX% from Turning as increased of the to average and basis the quarter, our individual portfolio reported rate from to business segments. interest of year, single-family guarantee was segment XX the grew billion

also mortgage rates. partially result in as fee interest interest Investment rates. to increases increased to slower by higher income offset of prepayments deferred lower due These net a higher were income due

mortgage-related driven due commitments single-family income loss the of to million was single-family this securitization hedge for was pipeline gains to XXXX, prior on in of In Noninterest quarter $XX XQ a agency income securities. quarter. by income compared $X.X year widening primarily noninterest on the spread to billion

this credit improved quarter release losses benefit The in house for by new acquisitions. to losses for prior economic conditions. $XXX year provision was due primarily credit million reserve a to prices higher for was $XXX the a single-family credit estimated million due and Our driven quarter, build credit reserve forecasted

up of points, quarter from XX The the a at was XX points for credit basis end allowance single-family this losses year earlier. coverage ratio basis

basis points basis The from the XXXX. of delinquency to X first from the serious quarter single-family rate XXXX to XQ XX of down basis at the and XX decline quarter, continues first points points end

quarter, XX,XXX loan helped their homes families In we first approximately the in workouts. remain through

the ratio Our single-family weighted and credit XXX. of credit weighted average XX% at loan-to-value score current with strong, average characteristics current the at portfolio remain

of At the XX% of the our enhancement. credit end form single-family had portfolio some of quarter,

activity this due declined as business mortgage year-over-year, a refinance XX%, in interest increases of rates. New or $XXX decline billion, $XX totaled activity quarter, significantly to billion

new of points ago XX% activity XQ basis The this XX new points our quarter. from XX% quarter versus year total basis on XX Home business to guarantee increased X made average purchase charged points business this basis volume XXXX. rate a fee up in by

$XXX decline was The versus Multifamily. by to higher by interest net prior $XX for segment on The quarter. credit benefit in the the the net this income, part for provision period. period driven lower reported of down million million, by or credit income Moving primarily year losses XX%, noninterest and year prior a in losses offset income from

to to down environment $XXX of income the last security rate interest interest Net million lower XX% high year-over-year led prepayment income compared as year. was

our guarantee during quarter. as million on $XXX of a fair interest positive value to year-over-year, rates up the Noninterest XX% income impact long-term was first declined asset

was quarter losses The million multifamily in credit a first small primarily forecasted to increased of $XX XXXX, uncertainty versus due this benefit economic provision conditions. quarter in for the

Our down activity $X rates higher reduced have demand billion financing. year for from the multifamily multifamily quarter, new for interest XX% first was business ago, as a mortgage

points to X% slightly the XX multifamily at quarter, the last of loan of loans was The delinquency year-over-year and $XXX driven primarily at portfolios. senior housing X up in This end billion. basis an delinquent up mortgage from March increased multifamily rate increase XX from our portfolio points the The quarter XXXX. balance end in small basis points was by increase and basis

by covered quarter. at was credit portfolio first mortgage the multifamily the the enhancement of XX% of Approximately end

On the year-over-year. the a to front, capital the billion XX% end at our quarter, of increased representing worth $XX.X increase net

Michael. With to turn that, it I'll back

Michael DeVito

first opportunities Thank work mission but an nation, we will for done. performance housing serve the the finance quarter rental Thank you, homeownership In solid across uncertain promote lot to focused a the Chris. our continue Freddie as environment, remain on there's sustainable in to force and be a system. and Mac's you. stabilizing helped economic more

Federal Home Loan Mortgage (FMCC) 3 May 232023 Q1 Earnings call transcript