Freddie Mac said a strengthening housing market resulted in a third-quarter profit that means the company will avoid increasing its debt to taxpayers for a second straight quarter.
The U.S.-owned mortgage financier, based in McLean, Virginia, had net income of $2.9 billion for the three-month period that ended Sept. 30 after accounting for a $1.8 billion dividend payment to the Treasury Department for the government stake, the company said today in a statement.
“Freddie Mac (FMCC)’s strong financial performance this quarter was driven by favorable market conditions, including the continued improvement in the housing market, as well as our ongoing efforts to minimize losses on our legacy book,” Freddie Mac Chief Executive Officer Donald Layton said in the statement.
The company’s inventory of delinquent loans is the lowest in two years, Layton said. The third-quarter delinquency rate on single-family loans backed by Freddie Mac fell to 3.37 percent from 3.45 percent in the second quarter.
Net income fell from $3 billion in the third quarter as Freddie Mac increased reserves for credit losses, Layton said.
Freddie Mac and Washington-based Fannie Mae have taken almost $190 billion in U.S. assistance since they were taken into federal conservatorship in September 2008 amid losses on risky loans that pushed them to the brink of insolvency.
Freddie Mac has paid $21.9 billion in dividends, about a third of the amount it has taken in Treasury aid.
Starting next year, the two taxpayer-owned companies will cease paying dividends of 10 percent to the Treasury and will instead pay any profits above a permitted capital reserve.
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