It may have been a tough quarter for Freddie Mac financially in Q1, having reported a $354 million net loss, but the GSE reported on Wednesday that it is close to meeting one year-end goal for 2016 as of the end of March.
Freddie Mac said in its March 2016 Monthly Volume Summary that its mortgage-related investments portfolio had contracted at an annual rate of 23.8 percent from February to March, dropping the aggregate unpaid principal balance (UPB) of the portfolio from $346.6 billion down to $339.8 billion.
The good news for Freddie Mac is that now the value of the portfolio is approximately only a half billion dollars off from its 2016 cap of $339.3 billion, which is the amount the portfolio must reach by the end of the year as part of its required wind-down. Freddie Mac’s fellow GSE, Fannie Mae, has already met its year-end goal in winding down its mortgage portfolio.
The Q1 loss for Freddie Mac, which was its second in the last three quarters, combined with the required wind-down of the mortgage-related investments portfolio and the required wind-down of the capital buffer will likely result in more intense calls for GSE reform in the coming months in order to save taxpayers from another potential bailout. Taxpayers remain on the hook the longer the GSEs remain in conservatorship of the FHFA, which they have been in since September 2008.
The value of Freddie Mac’s mortgage-related investments portfolio has declined by approximately $66 billion since the end of March 2015, when the aggregate UPB of the portfolio was $405.6 billion.
Freddie Mac’s total mortgage portfolio, meanwhile, increased at an annualized rate of 5.2 percent from February to March up to a value of $1.955 trillion. The total mortgage portfolio has now expanded for four months in a row and in 12 of the last 13 months.
The single-family delinquency rate on loans guaranteed by Freddie Mac, which was already near pre-crisis levels, dropped by another six basis points from February to March from 1.26 percent down to 1.20 percent. Freddie Mac completed 3,933 loan modifications in March and has completed 10,910 year-to-date in 2016 as of March 31. Relief refinance mortgages comprised approximately 9 percent of Freddie Mac’s total single-family refinance volume in March.
Click here to view Freddie Mac’s entire March 2016 Monthly Volume Summary.