Federal Home Loan Mortgage Corporation
Q4 2020 Earnings Call Transcript

Published: 11 Feb 2021

[Jeffrey Markowitz:]

Good morning, and thank you for joining us for a presentation of Freddie Mac's Fourth Quarter and Full Year 2020 Financial Results. I’m Jeffrey Markowitz, Senior Vice President of External Relations and Corporate Communications. We're joined today by our CFO, Chris Lown. Before we begin, we'd like to point out that during the call, Mr. Lown may make forward-looking statements based on assumptions about the company's key business drivers and other factors. Changes in these factors could cause the company's actual results to materially vary from these expectations. A description of those factors can be found in the company's annual report on Form 10-K filed today. Mr. Lown may also discuss non-GAAP financial measures. For more information about those measures, please see our earnings press release and related materials, which are posted on the Investor Relations section of freddiemac.com.

[Chris Lown:]

Good morning and thank you for your interest in Freddie Mac. During this morning's call, I will discuss our financial and business results. Let's start our 2020 review by noting that Freddie Mac continued to serve the important role for which it was founded. We delivered record liquidity of $1.2 trillion at a critical time, helping 4.6 million families purchase, refinance, or rent a home, a significant increase compared to the 2.6 million we supported in 2019. Key highlights in 2020 include, our record refinancing activity helped reduce mortgage payments for 2.7 million families. First-time homebuyers represented 46% of the 1.1 million homebuyers we supported. And of the over 800,000 multiple family units we helped finance, 96% were affordable to families making at or below 120% of the area median income. In addition, our support to American families during the pandemic included, implementing a single-family foreclosure and eviction moratorium covering more than 11 million families. As of December 31, more than 700,000 single-family borrowers had entered into forbearance agreements with our servicers, and nearly 61% or 437,000 have already exited forbearance after regaining their footing. And even before the Centers for Disease Control eviction ban went into place, we removed the threat of eviction for residents of the more than 4.6 million multifamily units we helped finance. That protection is ongoing for nearly 100,000 families covered by our multifamily forbearance program. Working closely with our conservator and industry partners, we are very proud of this support and these accomplishments. Turning to our financial results, Freddie Mac reported fourth quarter net income of $2.9 billion, up 18% from the prior quarter. Comprehensive income totaled $2.5 billion, up 3% from the prior quarter. This increase was driven by continued revenue growth and a release of loan loss reserves due primarily to realized house price appreciation in the fourth quarter. Looking into more detail, there was a 6% increase in net interest income from the prior quarter, which was driven by 7% growth in our single-family guarantee book. Our fourth quarter credit-related benefit totaled $0.1 billion, compared to an expense of $0.6 billion in the prior quarter. This was driven by realized house price appreciation in the fourth quarter, partially offset by a decrease in the expected credit enhancement recoveries in our risk transfer structures as a result of increased house prices.

[Operator:]

Well, ladies and gentlemen, thus conclude today’s presentation. You may now disconnect, and have a wonderful day.

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