Freddie Mac Needs Treasury Draw of About $300 Million

Government-sponsored enterprise Freddie Mac will require a Treasury draw of about $300 million in order to cover losses it incurred in the fourth quarter as a result of changes in the corporate tax code.

For the full year 2017, the company reported comprehensive income of $5.6 billion. In addition, the company realized a benefit from a litigation settlement of $4.5 billion, or $2.9 billion after tax. This was offset by a $5.4 billion write-down of the net deferred tax asset due to the impact of the recent tax reform legislation, the company says in a release.

Despite the one-time setback, the company says its “fundamentals remained strong” in 2017.

In a statement, Donald H. Layton, CEO of Freddie Mac, says 2017 was a “landmark year” in the GSE’s transformation.

“The guarantee book topped $2 trillion for the first time after growing six percent last year, the highest rate in a decade,” Layton says. “Our work to innovate and reimagine the mortgage experience – and almost all business activities – has helped increase our competitiveness and made home possible for 2.3 million home-buying and renting families in 2017.

“Notably, the number of first-time home buyers we funded hit a 10-year high, and we were once again the nation’s top multifamily financier,” Layton says. “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.”

Freddie Mac’s total guarantee portfolio grew 6% for the year, the highest growth rate in the past 10 years and exceeding $2 trillion for the first time, the company reports.

Its total mortgage-related investments portfolio decreased 15% to $253 billion, while its total investments portfolio decreased 13% to $342 billion.

At the same time, the company provided approximately $429 billion in liquidity to the mortgage market and funded nearly 1.5 million single-family homes and 820,000 multifamily rental units. What’s more, it guaranteed nearly 11 million single-family homes and nearly 4 million multifamily rental units at year-end.

The company returned about $10.9 billion to taxpayers in 2017 by way of its senior preferred stock purchase agreement with the U.S. government.

Last week, Fannie Mae, sister GSE to Freddie Mac, announced tat it has incurred a fourth quarter net loss of $6.5 billion as a result of the changes in the corporate tax code and that it would require a Treasury draw of about $3.7 billion.


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