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Federal Home Loan Mortgage Corporation (FMCC) |
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Description of Federal Home Loan Mortgage's Business Segments
The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, is a government-sponsored enterprise that plays a vital role in the U.S. housing finance system. Freddie Mac primarily operates through three reportable business segments: Single-family Guarantee, Multifamily, and Investments. Below, we provide a comprehensive description of each segment, along with associated products and services.
1. Single-family Guarantee
The Single-family Guarantee segment focuses on purchasing, securitizing, and guaranteeing single-family loans that are originated by lenders, while also managing the credit risk associated with these loans. Freddie Mac's activities within this segment enhance the liquidity, stability, and affordability of the U.S. housing market.
Key offerings, initiatives, and goals under Single-family Guarantee include:
- Market Leadership: Freddie Mac strives to provide quality offerings tailored to a diversified customer base. This includes developing innovative products and services to adapt to the evolving nature of the mortgage market.
- Customer Experience: Ongoing enhancements to products, processes, and technology aim to improve the overall customer journey. This includes streamlining loan origination and securitization processes.
- Risk Management: Establishing robust risk management practices ensures that Freddie Mac can handle the expected levels of mortgage credit risk, thereby protecting taxpayer interests.
- Technological Innovation: Freddie Mac actively develops technology platforms, such as automated underwriting systems and risk assessment tools, to assist lenders in evaluating mortgage credit risk accurately.
- Expanding Access to Mortgage Credit: By engaging in initiatives aligned with its charter mission, Freddie Mac aims to support responsible lending practices aimed at broadening homeownership opportunities. Programs focused on underserved populations are prioritized.
- Common Securitization Platform: In collaboration with other entities, including Fannie Mae, Freddie Mac is involved in the development of a common platform for mortgage securitization, which is expected to facilitate greater efficiency in the market.
Multifamily
The Multifamily segment is dedicated to providing liquidity in the multifamily housing market by purchasing and securitizing loans secured by properties with five or more units. This segment connects investors and lenders within the multifamily market, ensuring consistent access to capital for sustainable workforce housing.
Key features and strategies in the Multifamily segment include:
- Financing Workforce Housing: Freddie Mac plays a crucial role in financing multifamily housing to ensure a steady supply of affordable rental properties for the workforce.
- Risk-Adjusted Returns: By leveraging private capital through credit risk transfer transactions, Freddie Mac aims to enhance its financial performance while ensuring prudent management of risk.
- Customer-Focused Operations: The multifamily segment operates under a prior-approval underwriting model, ensuring stringent credit reviews tailored to each loan, thus maintaining high credit quality.
- Innovative Products: Freddie Mac is committed to fostering innovation within its product offerings to expand the availability of workforce housing, including exploring new financing arrangements and securitization techniques.
- Property Performance Monitoring: The segment emphasizes cash flow analysis derived from rental income and assesses market conditions, such as vacancy rates and regional economic factors, to ensure sound investments.
Investments
The Investments segment encompasses the management of Freddie Mac's mortgage-related investment portfolio, its treasury activities, and interest rate risk management. This segment plays a critical role in supporting the overall financial stability of Freddie Mac.
Primary responsibilities and focus areas of the Investments segment include:
- Mortgage-Related Investments Management: Freddie Mac manages a diverse portfolio of mortgage-related investments while excluding multifamily investments and any seriously delinquent single-family loans.
- Treasury and Liquidity Management: This segment oversees the funding and liquidity strategies of Freddie Mac, ensuring that it maintains adequate capital to meet its operational needs.
- Interest Rate Risk Management: Through the use of derivatives and other financial instruments, Freddie Mac manages its exposure to fluctuations in interest rates, thereby protecting its financial interests.
- Risk-Return Profile Management: The Investments segment carefully assesses the risk-return characteristics of its portfolio to optimize performance according to its internal economic capital framework.
- Market Opportunities: The segment actively seeks to enhance the liquidity of Freddie Mac's securities and respond to market demands, aligning its activities with the broader goals of the enterprise.
All Other Segment
Any activities that do not fall within the three primary segments are consolidated within the All Other category. This includes miscellaneous operations or initiatives that support the overarching mission of Freddie Mac but do not directly contribute to one of the three main segments.
Conclusion
Freddie Macs strategy is anchored in promoting efficient housing finance that benefits both the housing market and consumers. Each segment is designed to fulfill specific roles within the overarching objective of enhancing stability, affordability, and accessibility in the housing finance system. By focusing on risk management, innovation, and customer service, Freddie Mac aims to adapt to changing market conditions while supporting the needs of a diverse range of stakeholders in the U.S. housing market.
(Mar 31 2025) three months ended Q1
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| Business Segments |
Revenues
(in millions $) |
Income
(in millions $) |
%
(Profit Margin) |
| Total |
6,132.00 |
2,794.00 |
45.56 % |
(Mar 31 2025) three months ended Q1
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| Revenue Growth rates by Segment |
Y/Y Revenue
% |
Q/Q Revenue
% |
| Total |
3.27 % |
-4.5 % |
(Mar 31 2025) three months ended Q1
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| Income Growth rates by Segment |
Y/Y Income
% |
Q/Q Income
% |
| Total |
1.01 % |
-13.28 % |
Annual Report on Federal Home Loan Mortgage Corporation Divisions, Sales by Country |
Twelve months ended 2024
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| FMCC s Annual Revenue by Geography and Business Segments |
Sales
(in millions $) |
%
(of total Sales) |
| Total |
24,388.00 |
100 % |
Twelve months ended 2024
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| FMCC s Annual Income by Country and Business Segments |
Income
(in millions $) |
%
(Profit Margin) |
| Total |
11,858.00 |
48.62 % |
Twelve months ended 2024
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| Annual Revenue and Income Growth by Country and Business Segments |
% Y/Y Sales Growth |
% Y/Y Income Growth |
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