Freddie Mac · OTC:FMCC
Freddie Mac — Federal Home Loan Mortgage Corp (Fmcc, Fmccg, Fmcci, Fmccj, Fmccl, Fmccn, Fmcco, Fmccs, Fmcct, Fmcki, Fmckl, Fmckn, Frejn, Frejo) — Q1 2010 Earnings Presentation
30 slides from Freddie Mac's earnings presentation, May 5, 2010
Slide 1: First Quarter 2010 Financial Results Supplement
First Quarter 2010 Financial Results Supplement May 5, 2010
Slide 2: Table of contents
Table of contents Freddie A Mac 3. ‘Quarterly GAAP Financial Results ‘otal Equity and Purchas Agreement with Treasury Purchase Agreement Portfolio Limits Loan Loss Reserves ‘Supporting the Housing Market Freddie Mac Refinance Activity 12 National Home Pree 13. State-by-State Home Prices ‘6 Mortgage
Slide 3: Quarterly GAAP financial results
Quarterly GAAP financial results 1Q 2010 results are not directly comparable to prior periods1 Line 1: Net interest income decreased in 1Q 2010 primarily due to a significant increase in the average balance of non- performing mortgage loans for which the company recognizes debt funding costs but not
Slide 4: Total equity and Purchase Agreement with Treasury
Total equity and Purchase Agreement with Treasury 1 On January 1, 2010, the company adopted the new accounting standards related to transfers of financial assets and consolidation of variable interest entities (VIEs). The cumulative effect of these changes in accounting principles was a net decrease
Slide 5: Purchase Agreement portfolio limits
Purchase Agreement portfolio limits1 Indebtedness 1,3 ($ Billions) Mortgage Assets 1,2 ($ Billions) 1 The company's Purchase Agreement with Treasury limits the amount of mortgage assets the company can own and indebtedness it can incur. Under the Purchase Agreement, mortgage assets and indebtedness
Slide 6: Loan loss reserves
Loan loss reserves 1 Includes allowance for loan losses and reserve for guarantee losses. As of March 31, 2010, the company's reserve for guarantee losses is included in other liabilities as a result of the company's adoption of the new accounting standards related to transfers of financial assets a
Slide 7: Supporting the housing market
Provided much needed liquidity and helped keep mortgage rates low during the first quarter of 2010 Purchased or guaranteed approximately 1 out of every 4 home loans originated1 Purchased or guaranteed approximately $97 billion in mortgages and mortgage- related securities Lowered mortgage payments R
Slide 8: Freddie Mac refinance activity
Freddie Mac has helped to refinance approximately 320,000 borrowers during 1Q 2010 Estimated total annual borrower savings of $6141 million Estimated annual savings of over $1,9001 per refinanced borrower Relief Refinances under the MHA Program continued to increase as a percentage of overall refina
Slide 9: Home Affordable Modification Program update
Active HAMP trial period loans Completed HAMP loan modifications As of March 31, 2010, Freddie Mac has implemented approximately 198,000 trial and permanent HAMP modifications Estimated annual borrower savings of nearly $8,8003 per modified loan 1 Active trial period loans based on first trial payme
Slide 10: Single-family foreclosure alternatives
Total Single-family foreclosure alternatives 1 Based on the number of modifications offered by the company's servicers and accepted, or acknowledged by the company and the borrower during the period. Includes completed loan modifications under HAMP; however, the number of such completions differs fr
Slide 11: Credit Supplement
Freddi Bvisc Credit Supplement
Slide 12: National home prices cumulative decline of 20% since June 2006
National home prices have experienced a cumulative decline of 20% since June 20061 1 National home prices use the internal Freddie Mac index, which is value-weighted based on Freddie Mac's single-family credit guarantee portfolio. The U.S. index is a monthly series; quarterly growth rates are calcul
Slide 13: State-by-state home prices
41 states had home price declines from March 2009 to March 20101 -9.4 -5.6 -0.9 - -7.4 8.8 8.8 RI -3.2 CT -2.2 DC 9.2 - -5.3 - -4.3 - -8.2 - -1.1 2.4 - -14.0 - -2.2 -1.1 - -0.9 -0.8 -1.6 - -5.5 - -3.9 - -3.5 - -3.3 -1.9 -5.6 - -2.6 - -6.5 - -4.3 -1.1 -8.5 - -3.3 - -4.5 - -11.7 3.3 2.5 -0.1 - -11.3 0
Slide 14: Mortgage market and Freddie Mac delinquency rates
Mortgage market and Freddie Mac delinquency rates Single-family delinquency rates as of December 31, 2009 1 Source: National Delinquency Survey from the Mortgage Bankers Association. Categories represent first lien single-family loans. Data is not yet available for the first quarter of 2010. 2 Inclu
Slide 15: Single-family credit statistics
Single-family credit statistics 1 Calculated as annualized credit losses divided by the average total single-family credit guarantee portfolio. 2 Consists of total single-family credit guarantee portfolio and single-family REO balances shown on line 8. 3 REO ending inventory (number of units) was 29
Slide 16: Single-family credit losses by book year and state
Single-family credit losses by book year1 and state 1 Book year indicates year of loan origination. 2 Based on the unpaid principal balance of the single-family credit guarantee portfolio. 3 Consist of the aggregate amount of charge-offs, net of recoveries, and REO operations expense in each of the
Slide 17: Single-family 1Q 2010 credit losses and REO counts by region and state
Single-family 1Q 2010 credit losses & REO counts by region and state 1 Based on the unpaid principal balance of the single-family credit guarantee portfolio. 2 Based on mortgages 90 days or more delinquent or in foreclosure. UPB amounts exclude certain Structured Transactions for which loan characte
Slide 18: Single-family credit guarantee portfolio characteristics
Single-family credit guarantee portfolio characteristics1 1 Portfolio characteristics are based on the unpaid principal balance of the single-family credit guarantee portfolio excluding certain Structured Transactions for which the loan characteristics data is not available. 2 Loans identified as Al
Slide 19: Single-family credit guarantee portfolio characteristics, continued
Single-family credit guarantee portfolio characteristics1 1 Portfolio characteristics are based on the unpaid principal balance of the single-family credit guarantee portfolio excluding certain Structured Transactions for which the loan characteristics data is not available. 2 Loans identified as Al
Slide 20: Single-family credit profile by book year and product feature
Single-family credit profile by book year and product feature1 1 Portfolio characteristics are based on the unpaid principal balance of the single-family credit guarantee portfolio excluding certain Structured Transactions for which the loan characteristics data is not available. 2 Indicates year of
Slide 21: Single-family credit guarantee portfolio composition by product
Single-family credit guarantee portfolio composition by product1 1 Based on the unpaid principal balance of the single-family credit guarantee portfolio excluding certain Structured Transactions for which the loan characteristics data is not available. 2 Based on the number of mortgages 90 days or m
Slide 22: Cumulative default rates by book year
Total Single-family credit guarantee portfolio cumulative default rates1 by book year 1 Represents the cumulative transition rate of loans to a default event, and is calculated for each year of origination as the number of loans that have proceeded to foreclosure acquisition or other disposition eve
Slide 23: Multifamily credit profile by loan attributes
Multifamily credit profile by loan attributes1 1 Based on unpaid principal balance of the multifamily mortgage portfolio which excludes securities and guarantees backed by HFA bonds and multifamily Structured Transactions. 2 Based on unpaid principal balances. Prior period rates have been revised to
Slide 24: Impacts Resulting from the Adoption of New Accounting Standards (Consolidation of VIEs)
Impacts Resulting from the Adoption of New Accounting Standards (Consolidation of VIEs)
Slide 25: Adoption of new accounting standards
Adoption of new accounting standards The adoption of new accounting standards related to transfers of financial assets and consolidation of variable interest entities (VIEs) on January 1, 2010 resulted in a significant change to Freddie Mac's accounting model. Changes adopted prospectively and do no
Slide 26: Impacts to income statement
Impacts to income statement Line 1: Freddie Mac now recognizes interest income on the mortgage loans underlying consolidated single-family PCs and certain Structured Transactions. Interest income includes the portion of interest that was historically recognized as management and guarantee income. Li
Slide 27: Impacts to balance sheet
Impacts to balance sheet Line 1: Restricted cash and cash equivalents increased due to the recognition of cash held by PC trusts that the company consolidated. Line 2: Investments in securities decreased as Freddie Mac no longer accounts for consolidated PCs and Structured Transactions it holds as i
Slide 28: Impacts to accounting for loans & securitizations
Impacts to accounting for loans & securitizations Pre-Consolidation of VIEs Post-Consolidation of VIEs Mortgage Loans, Net and Issuance of Single-Class Securities (PCs) Both the underlying mortgage loan and security balances were recorded off-balance sheet. The mortgage loans underlying consolidated
Slide 29: Impacts to investments and debt accounting
Pre-Consolidation of VIEs Post-Consolidation of VIEs Freddie Mac investment in its issued single-class securities (PCs) Accounted for as securities. Gain/loss recognition triggered by sale of a security (Gain/loss on sale of securities). Securities marked-to-market through the income statement (Trad
Slide 30: Safe Harbor Statements
Safe Harbor Statements Freddie Mac obligations Freddie Mac's securities are obligations of Freddie Mac only. The securities, including any interest or return of discount on the securities, are not guaranteed by and are not debts or obligations of the United States or any federal agency or instrument