Mortgage Daily Logo
mortgage news from industry experts

Taxpayers Solidly in the Black on Freddie Bailout

A series of one-time events at the Federal Home Loan Mortgage Corp. pushed earnings significantly higher last year — leaving taxpayers with a tidy profit. But the level of earnings is not expected to continue.

Single-family purchases and issuances amounted to $423 billion during 2013, according to fourth-quarter earnings data released on Thursday.

Volume was virtually unchanged from the previous year, when single-family purchases and issuances came in at $427 billion.

Among all single-family credit guarantee portfolio purchases last year, Freddie said 27 percent were for purchase financing. The 73 percent that were refinances reflected a 15 percent Home Affordable Refinance Program share and an 8 percent non-HARP relief refinance share.

The weighted-average credit score on last year’s single-family purchases was 749, down from 756 in 2012. Weighted-average original loan-to-value ratios slipped to 75 percent from 76 percent.

Multifamily volume drifted down to $26 billion from $29 billion in 2012.

Freddie finished last year with 47,000 real-estate-owned assets.

Repurchase demands issued last year amounted to $10.8 billion.

As of Dec. 31, 2013, there were $2.2 billion in repurchase requests outstanding, down from $3.0 billion at the end of 2012.

Settlements with various financial institutions over private-label mortgage-backed securities contributed $5.5 billion to last year’s earnings, including $4.8 billion in the fourth quarter.

In addition, Freddie reached a $767 million settlement with Lehman Brothers and a $625 million settlement with Morgan Stanley in February. Nearly half of the Lehman settlement was recognized in the fourth quarter.

The McLean, Va.-based company said it earned $9.3 billion prior to taxes during the final three months of last year, surging from $6.5 billion in the third quarter.

For all of 2013, pre-tax income shot up to $25.4 billion from $9.4 billion in 2012.

“The increase primarily reflects higher other non-interest income driven by higher private label securities litigation settlement proceeds, as well as a shift from derivative losses in the third quarter to derivative gains in the fourth quarter,” the report said. :These favorable impacts were partially offset by higher net impairment expense and a lower benefit for credit losses.”

Last year’s after-tax earnings reflected a full-year tax benefit of $23.3 billion from the release of deferred tax asset valuation allowance.

Freddie noted that the recent level of earnings is not sustainable over the long term.

The secondary lender reported that including a first-quarter 2014 dividend payment of $10.4 billion, it has paid $81.8 billion in total dividends to the Department of the Treasury– more than the $72.3 billion in Treasury draws it has received since being bailed out in September 2008.

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts