Freddie Mac · OTC:FMCC
Freddie Mac — Investor Day (April 2023)
18 slides from Freddie Mac's investor day presentation, Apr 20, 2023
Slide 1: Portfolio Management & Analytics
Portfolio Management & Analytics Public Prepared by Freddie Mac © Freddie Mac
Slide 2: Today's Speaker
Today’s Speaker Sacha Rosenthal Vice President, Single-Family Servicing Portfolio Analytics Sacha Rosenthal is accountable for developing strategies and analytics related to portfolio management, climate change and natural disasters, loss mitigation, distressed collateral liquidation, servicing poli
Slide 3: Our Agenda
Our Agenda 1. Portfolio Delinquency Rates 2. Forbearance & Foreclosure Volumes 3. Natural Disasters 4. Climate Risk Public Document Title & Date Goes Here Prepared by Freddie Mac © Freddie Mac
Slide 4: Portfolio Delinquency Rates
Portfolio Delinquency Rates • Early delinquency rates have remained relatively consistent o D30 rates show volatility, which is normal • We ended 2022 with 0.66% Serious Delinquency rate • We are close to pre-pandemic levels (0.63% as of December 2019) https://www.freddiemac.com/investors/financials
Slide 5: Forbearance Volume and Workouts
Forbearance Volume and Workouts • Forbearances continue to decline to low levels • Payment Deferrals, designed for short-term/temporary hardship, continue to make up a large part of the loss mitigation activity • We have seen a transition to Flex Modifications (designed for permanent/long-term hards
Slide 6: Foreclosure Volume - National
Foreclosure Volume - National 2021 • Foreclosure referrals have begun and rising, yet are still below pre-pandemic levels • There is a time lag before we see foreclosure referrals go to sale o Not every loan that is referred ultimately goes to sale https://www.blackknightinc.com/wp-content/uploads/2
Slide 7: Things to Noodle
Things to Noodle Is borrower behavior different this time around vs. the 2007-2008 crisis? • Many borrowers have equity • Unemployment is very low • Are borrowers prioritizing mortgage payment over other debt as the house is their most valuable asset? Selling, moving and renting is expensive • Forbe
Slide 8: Natural Disasters
Natural Disasters Public Investor Day – April 20, 2023 Prepared by Freddie Mac © Freddie Mac
Slide 9: Natural Disasters
Natural Disasters • We have developed an application that checks FEMA’s declaration page daily and maps/tags every loan in the portfolio that is impacted by Individual Assistance • When large events strike (such as a hurricane), a full analysis on impacts is conducted o We leverage several external
Slide 10: Hurricane Delinquency Pattern – Example
0 Hurricane Delinquency Pattern – Example Public Investor Day – April 20, 2023 Prepared by Freddie Mac © Freddie Mac
Slide 11: Climate Risk
Climate Risk Public Investor Day – April 20, 2023 Prepared by Freddie Mac © Freddie Mac
Slide 12: Physical Risk
Physical Risk Physical risk stems from the direct and indirect effects of physical hazards whose frequency/intensity may be worsening with climate change • Hazards include: o Flood o Wind (including hurricanes) o Drought and water stress o Wildfire o Rising temperatures and heat waves • Physical ris
Slide 13: Transition Risk
Transition Risk Transition risk stems from the societal and economic transition to a low-carbon economy • Regulations that require energy efficiency can result in costly retrofits or fines Residential emissions make up • Carbon taxes or strained 15% of total U.S. emissions supply can lead to increas
Slide 14: Insurance
Insurance Increasing physical hazards make it a challenge for the insurance industry to offer sufficient and affordable coverage Cost • Premiums increase as a result of rising hazard risk • Rising premiums increase the overall costs of homeownership Coverage • Property owners may purchase only the m
Slide 15: Borrower Impacts
Borrower Impacts Impacts will fall disproportionately on low income and minority populations, making it increasingly difficult to sustain safe, affordable housing Affordability Property Value • Repair costs for uninsured damage from • Price adjustments for unrepaired physical hazards damages • Highe
Slide 16: Climate Scenario Analysis
Climate Scenario Analysis Climate scenario analysis is a method to assess physical and transition risks based on different climate pathways over time Climate scenario analysis can help us identify risks… • Properties and locations most vulnerable to climate risks • Circumstances that may lead to sig
Slide 17: Questions?
Questions? Public Prepared by Freddie Mac © Freddie Mac
Slide 18: Thank You
Thank You Public Prepared by Freddie Mac © Freddie Mac