March 12, 2012 (Shirley Allen)
Government Sponsored Enterprise (GSE) Freddie Mac reports that it posted net income of $619 million and other comprehensive income of $887 million in the fourth quarter of 2011, resulting in total comprehensive income of $1.5 billion.
The mortgage giant also stated in its Fourth Quarter Results report that it was making a required $1.7 billion dividend payment to the Treasury Department and as a consequence, had a net worth deficit of $146 million as of December, 2011, prompting the Acting Director of the Federal Housing Finance Agency (FHFA) to submit a request for $146 million in funds to the Treasury Department to eliminate the mortgage giant’s net worth deficit.
FHFA oversees the operation of Freddie Mac since the company was taken over by the government in September of 2008 after massive loses threatened to topple the company when the housing market collapsed.
The fourth quarter’s comprehensive income compares to a $4.4 billion comprehensive loss in the third quarter of 2011. Freddie Mac said the shift from a loss to a gain reflected lower derivative losses due to a smaller decline in long-term interest rates and a decrease in the provision for credit losses related to single-family loans.
The latest request for funds puts the total cost to taxpayers for Freddie Mac alone at $72.3 billion.
For the entire year of 2011, Freddie Mac reported a net loss of $5.3 billion compared to a net loss of $14.0 billion in 2010 and made a total of $7.6 billion in fund requests to the Treasury Department compared to $13.0 billion in 2010.
Despite the continuing losses in its portfolio, Freddie Mac reports that credit quality of single-family loans acquired after 2008 has been strong as measured by original loan-to-value (LTV) ratios, FICO scores, and the proportion of loans underwritten with fully documented income and expects better performance from its portfolio in the future.
As of December 31, 2011, fifty-one percent of the company’s single-family guarantee portfolio of mortgage loans was originated after 2008.
Freddie Mac’s single-family serious delinquency rate increased to 3.58 percent at the end of the fourth quarter, up from 3.51 percent at the end of the third quarter of 2011, but still well below industry benchmarks.
The mortgage giant was also able to help 208,274 borrowers avoid foreclosure in 2011 which included 109,174 loan modifications, 33,421 repayment plans, 19,516 forbearance agreements, and 46,163 short sales and Deed-in-lieu transactions.
Charles E. Haldeman Jr., Chief Executive Officer of Freddie Mac, stated, “Freddie Mac remained a pillar of support for the nation’s housing finance system and a steadfast partner with American homeowners and renters in 2011. We continue to be a vital source of mortgage funding – last year alone we provided over $360 billion of liquidity to the market. This enabled nearly two million American families to buy or rent a home, including 1.2 million homeowners who were able to refinance their mortgages and save approximately $2,300 in annual interest payments. We also helped to stabilize communities across the country by assisting more than 208,000 borrowers to avoid foreclosure and selling more than two-thirds of our REO properties to owner-occupants.”
Tags: Freddie Mac, Fourth Quarter Results, FHFA, mortgage market, loan modifications, mortgage giant, GSE, single-family mortgages