Freddie Mac recovers in 2Q, posts net income of $993M

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Freddie Mac recorded a net income of $993 million for the second quarter of 2016, recovering from its net loss of $354 million for the first quarter of 2016.

The company also reported comprehensive income of $1.1 billion for the second quarter of 2016, compared to a comprehensive loss of $200 million for the first quarter of 2016.

Freddie attributed the significant rise to it being “less affected by market-related items than results for the first quarter of 2016.”

“We had both solid business and financial results this quarter, reflecting further improvement in our competitiveness and capabilities, highlighted by strong new guarantee business volumes,” said Donald Layton, Freddie Mac CEO.

“We also further reduced taxpayer risk through both the efficient disposition of legacy assets and our credit risk transfer transactions, which achieved a major milestone in having now cumulatively transferred a significant portion of credit risk on over $650 billion of single-family and multifamily loans,” he continued.

Thanks to its net income this year, Freddie will have returned $99.1 billion to taxpayers following its third-quarter payment, $27.8 billion more than cumulative cash draws of $71.3 billion received from Treasury through June 30, 2016. 

Freddie Mac’s dividend obligation to Treasury in September 2016 will be $933 million, based on its net worth of $2.1 billion at June 30, 2016, less the 2016 capital reserve amount of $1.2 billion.

The earnings report noted that the applicable capital reserve amount is $1.2 billion for 2016, and will be $600 million for 2017 and zero beginning on Jan. 1, 2018.

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