Like its sister agency, Freddie Mac this week reported large Q4 losses that will require government bailout money for the first time since 2012. The major difference is that Freddie won't need as much money as Fannie Mae.
On Thursday, Freddie released its Q4 and overall 2017 financial report, showing a $3.3 billion loss in the fourth quarter that will require $300 million in federal assistance. The report comes one day after Fannie Mae released its report for the same time period and posted a $6.5 billion downturn in the quarter that requires a $3.7 billion bailout.
Overall, Freddie reported $5.6 billion in annual net income in 2017. A $4.5 billion benefit from a litigation settlement ($2.9 billion after taxes) and a $5.4 billion write-down of the net deferred tax asset resulting from December's tax overhaul by Congress were the two main contributing factors to the GSE's net income last year.
Like Fannie Mae, Freddie is putting on an optimistic face, despite the loss. The report stated that Freddie's total guarantee portfolio grew 6 percent, exceeding $2 trillion for the first time. The growth rate is the highest for Freddie in a decade. The agency's total mortgage-related investments portfolio declined 15 percent to $253 billion, while the total investments portfolio declined 13 percent to $342 billion.
Freddie CEO Donald Layton called 2017 “a landmark year in Freddie Mac’s transformation.” He lauded the agency's efforts to help put more than 2 million people in homes last year, and especially new buyers.
“The number of first-time homebuyers we funded hit a 10-year high and we were once again the nation’s top multifamily financier,” Layton said. “At the same time, we significantly lowered taxpayer exposure to our risks, having reduced impaired assets in the investment portfolio by nearly 30 percent through cost-effective transactions, while integrating credit risk transfer extensively across both guarantee businesses.”
According to the report, Freddie provided approximately $429 billion in liquidity to the mortgage market, funded nearly 1.5 million single-family homes and 820,000 multifamily rental units, and guaranteed nearly 11 million single-family homes and nearly 4 million multifamily rental units at year-end. The GSE also returned $11 billion to taxpayers in 2017.