Freddie Mac Reports Net Income of $2.5 Billion and

Comprehensive Income of $2.4 Billion for Third Quarter 2020

The Company Delivered Strong Financial Results While Continuing to Support the Housing Market During the Pandemic

"The company delivered strong earnings on higher revenues, substantially increasing our total 

equity by $2.5 billion to $13.9 billion - bringing us one step closer to our goal of responsibly 

exiting conservatorship. We did this while helping hundreds of thousands of families buy, rent 

and remain in their homes."

David M. Brickman Chief Executive Officer

Third Quarter 2020 Financial Results 

• Net income of $2.5 billion and comprehensive income of $2.4 billion, up $0.7 billion and $0.5 

billion, respectively, from the prior quarter, driven by guarantee portfolio growth, higher upfront fee 

income recognition, and strong margins on Multifamily loan commitments. 

• Provision for credit losses of $0.3 billion, reflecting both portfolio growth and stabilization of 

estimates of expected credit losses related to the COVID-19 pandemic.

• Total equity/net worth(1) increased to $13.9 billion, from $11.4 billion on June 30, 2020.

Providing Stability to the Housing Market, While Fulfilling Affordable Housing Mission(2)

• Continued to provide mortgage-relief options for borrowers affected by the COVID-19 pandemic, 

including forbearance programs for both single-family and multifamily borrowers.

• Extended moratorium on foreclosures and evictions until at least December 31, 2020.

• Extended temporary measures designed to provide flexibility to homeowners, sellers, and appraisers 

to expedite loan closings during the COVID-19 pandemic.

• Issued first Multifamily Social Bond, with proceeds used to provide liquidity to social impact financial 

institutions that finance multifamily properties that are affordable to an underserved population.

Executing on Business Fundamentals

• New Single-Family business activity increased to $337 billion, up 45% from the prior quarter, 

reflecting strong home purchase and refinance activity. 

• New Multifamily business activity declined to $18 billion, down 10% from the prior quarter; full year 

2020 activity expected to be comparable to full year 2019.

• Single-Family and Multifamily guarantee portfolios grew 11% and 14%, respectively, year over year.

• Serious delinquency rate for Single-Familyincreased to 3.04%, from 2.48% in the prior quarter, 

driven by loans in forbearance due to the COVID-19 pandemic. 

• Multifamily delinquency rate, which does not include loans in forbearance, increased to 0.13%.

Managing Risk

• Completed nearly 193,000 single-family loan workouts, including forbearance agreements and 

payment deferrals, versus 89,000 workouts in the prior quarter. 

• 2.95% and 2.21% of the loans in the Single-Family guarantee portfolio and the Multifamily mortgage 

portfolio, respectively, were in forbearance as of September 30, 2020.

• 52% and 90% of the loans in the Single-Family guarantee portfolio and the Multifamily mortgage 

portfolio, respectively, were covered by credit enhancements as of September 30, 2020.

(1) See page 12 for additional information about the company's net worth and increases in the aggregate liquidation preference of the senior preferred stock resulting from increases in the 

company's net worth pursuant to the September 2019 Letter Agreement.

(2) See the company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020, and September 30, 2020, for additional information on its response efforts 

related to the COVID-19 pandemic and its outlook for 2020.
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 2 

McLean, VA — Freddie Mac (OTCQB: FMCC) today reported net income of $2.5 billion for the third quarter of 

2020, an increase of 39% compared to net income of $1.8 billion for the second quarter of 2020. The company 

also reported comprehensive income of $2.4 billion for the third quarter of 2020, an increase of 26% compared to 

comprehensive income of $1.9 billion for the second quarter of 2020. 

Net revenues were $5.1 billion, an increase of 22% compared to $4.1 billion for the second quarter of 2020. Net 

interest income increased 20% to $3.5 billion, primarily driven by growth in the Single-Family guarantee portfolio 

and higher upfront fee income recognition due to faster loan prepayments as a result of the record low mortgage 

interest rate environment. Investment gains, net increased 67% to $1.1 billion, primarily driven by continued strong 

margins on Multifamily loan commitments and gains on sales of single-family reperforming loans. 

Credit-related expense declined 16% to $0.6 billion. Provision for credit losses was lower compared to the second 

quarter of 2020, as realized house price growth in the third quarter of 2020 was robust and estimates of expected 

credit losses related to the COVID-19 pandemic have started to stabilize. Credit costs related to portfolio growth 

and a lower benefit from expected credit enhancement recoveries also affected credit-related expenses.

Summary of Consolidated Statements of Comprehensive Income (Loss) 

(Dollars in millions) 3Q 2020 2Q 2020 Change 3Q 2019 Change

Net interest income $3,457 $2,876 $581 $2,410 $1,047

Guarantee fee income 315 469 (154) 280 35

Investment gains (losses), net 1,122 670 452 568 554

Other income (loss) 172 134 38 121 51

Net revenues 5,066 4,149 917 3,379 1,687

Benefit (provision) for credit losses (327) (705) 378 179 (506)

Credit enhancement expense (267) (233) (34) (197) (70)

Expected credit enhancement recoveries 20 221 (201) — 20

Real estate owned (REO) operations expense (40) (14) (26) (58) 18

Credit-related expense (614) (731) 117 (76) (538)

Administrative expense (641) (601) (40) (620) (21)

Temporary Payroll Tax Cut Continuation Act of 2011

expense (467) (442) (25) (408) (59)

Other expense (237) (140) (97) (139) (98)

Operating expense (1,345) (1,183) (162) (1,167) (178)

Income (loss) before income tax (expense) benefit 3,107 2,235 872 2,136 971

Income tax (expense) benefit (644) (458) (186) (427) (217)

Net income (loss) 2,463 1,777 686 1,709 754

Total other comprehensive income (loss), net of

taxes and reclassification adjustments (14) 161 (175) 139 (153)

Comprehensive income (loss) $2,449 $1,938 $511 $1,848 $601
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 3 

Selected Financial Measures 

Net Interest Income and Net Interest Yield

(Dollars in billions) 

 

• Net interest income increased from the prior quarter, primarily due to higher guarantee portfolio net interest 

income, which was largely attributable to portfolio growth and higher upfront fee income recognition as a 

result of the record low mortgage interest rate environment. 

Guarantee Fee Income(1) and 

Multifamily Guarantee Portfolio 

 

(1) Guarantee fee income on a GAAP basis is primarily from the company’s Multifamily business.

• Guarantee fee income decreased from the prior quarter, primarily due to higher fair value losses on the 

Multifamily guarantee asset as a result of an increase in interest rates from the prior quarter. Because most 

multifamily loans are not prepayable without penalty, increases in interest rates generally result in lower 

Multifamily guarantee asset fair values.
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 4 

Credit-Related Expense

(Dollars in billions) 

 Amounts may not add due to rounding.

• Credit-related expense decreased from the prior quarter, primarily driven by:

Lower provision for credit losses reflecting strong house price growth in the third quarter of 2020 and 

estimates of expected credit losses related to the COVID-19 pandemic that are beginning to stabilize; 

partially offset by

Higher credit costs related to portfolio growth; and

A lower benefit from expected credit enhancement recoveries.
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 5 

Non-GAAP Financial Measure Highlights

In addition to analyzing the company’s results on a GAAP basis, management reviews net interest income and 

guarantee fee income on an “adjusted,” or non-GAAP basis. These adjusted financial measures are calculated by 

reclassifying certain credit guarantee-related activities and investment-related activities between various line items 

on the company’s GAAP consolidated statements of comprehensive income. The company also presents one 

additional non-GAAP financial measure, adjusted net interest yield, that is calculated based on adjusted net 

interest income. Management believes that these non-GAAP financial measures are useful because they more 

clearly reflect the company’s sources of revenue and return.

For additional information about the company's non-GAAP financial measures and reconciliations to the 

comparable amounts under GAAP, see pages 16 - 17 of this press release.

Adjusted Net Interest Income(1), Adjusted Net Interest Yield(1), and 

Investments Portfolio

(Dollars in billions)

 

(1) Non-GAAP financial measure. For reconciliations to the comparable amounts under GAAP, see pages 16-17 of this press release.

Amounts may not add due to rounding.

• Adjusted net interest income and adjusted net interest yield decreased from the prior quarter, primarily 

driven by higher loan prepayments that resulted in an increase in amortization expense, combined with a 

change in investment mix as the lower-yielding other investments portfolio represented a larger percentage 

of the total investments portfolio. 

• The mortgage-related investments portfolio was $198 billion, up $4 billion, or 2%, from the prior quarter 

and down $23 billion, or 11%, from the prior year. In February 2019, FHFA instructed the company to 

maintain the mortgage-related investments portfolio at or below $225 billion at all times.
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 6 

Adjusted Guarantee Fee Income(1) and 

Total Guarantee Portfolio 

(Dollars in billions) 

 

(1) Non-GAAP financial measure. For reconciliations to the comparable amounts under GAAP, see pages 16-17 of this press release.

Amounts may not add due to rounding.

• Adjusted guarantee fee income remained relatively flat from the prior quarter as higher Single-Family 

guarantee fee income driven by portfolio growth and higher upfront fee income was largely offset by lower 

Multifamily guarantee fee income due to higher fair value losses on the guarantee asset.

• The total guarantee portfolio grew $134 billion, or 6%, from the prior quarter and $255 billion, or 11%, from 

the prior year, driven by increases in both the Single-Family and Multifamily guarantee portfolios.

Return on Conservatorship Capital (ROCC)

In May 2020, FHFA released its re-proposed Enterprise Capital Rule for comment. The re-proposed capital rule, if 

adopted, would significantly increase the company's capital requirements and, as a result, would significantly 

lower its returns on capital. It also could meaningfully affect the company's business strategies.

Until FHFA issues a final Enterprise Capital Rule, Freddie Mac will continue to use the Conservatorship Capital 

Framework (CCF) to evaluate business decisions and ensure the company makes such decisions prudently when 

pricing transactions and managing its business. The CCF has been and may be further revised by FHFA from time 

to time, including in connection with FHFA’s consideration and adoption of a final Enterprise Capital Rule, which 

could possibly result in material changes in the company's conservatorship capital and, thus, its returns on 

conservatorship capital.

The table below provides the ROCC, calculated as (1) annualized comprehensive income for the period divided by 

(2) average conservatorship capital during the period. 

ROCC is not based on the company's total equity and does not reflect actual returns on total equity. The company 

does not believe that returns on total equity are meaningful because of the net worth limit imposed since 2012 

under the Purchase Agreement. In addition, the company believes that returns post conservatorship would most 

likely be lower than the levels calculated below, assuming the same portfolio of risk assets, as it expects that it 

would hold capital above the minimum required regulatory capital levels and that it would likely be required to pay 

fees for federal government support, thereby reducing its total comprehensive income. 
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 7 

Return on Conservatorship Capital

(Dollars in billions) 3Q 2020 2Q 2020 Change 3Q 2019 Change

Comprehensive income $2.4 $1.9 $0.5 $1.8 $0.6

Conservatorship capital (average during the period)(1)(2) $52.3 $49.8 $2.5 $51.3 $1.0

ROCC, based on comprehensive income 18.7% 15.6% 3.1% 14.4% 4.3%

(1) Average conservatorship capital and ROCC for 3Q 2020 are preliminary and subject to change until official submission to FHFA. Prior period preliminary numbers have been updated, as 

needed, to reflect final data submitted to FHFA. 

(2) Average conservatorship capital for each period is based on the CCF in effect during that period. The CCF in effect as of September 30, 2020 was largely unchanged from the CCF as of 

June 30, 2020 and September 30, 2019.

ROCC increased compared to the prior quarter, primarily driven by the increase in comprehensive income in the 

third quarter of 2020, partially offset by an increase in the level of conservatorship capital needed, resulting from 

growth in the Single-Family and Multifamily guarantee portfolios.

For additional information on the CCF and ROCC, see the company’s Quarterly Report on Form 10-Q for the 

quarter ended September 30, 2020.

Segment Financial Results and Business Highlights

Freddie Mac’s operations consist of three reportable segments, which are based on the types of business activities 

they perform – Single-Family Guarantee, Multifamily, and Capital Markets. The company presents Segment 

Earnings for each reportable segment by reclassifying certain credit guarantee-related activities and investmentrelated activities between various line items on its GAAP consolidated statements of comprehensive income and 

allocating certain revenues and expenses, including funding costs and administrative expenses, to its three 

reportable segments.

For more information about Segment Earnings, see Note 13 to the financial statements included in the company’s 

Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

Single-Family Guarantee Segment 

Providing liquidity to the market while transforming U.S. housing finance

Financial Results(1) 

(Dollars in millions) 3Q 2020 2Q 2020 Change 3Q 2019 Change

Guarantee fee income $2,683 $2,528 $155 $2,064 $619

Investment gains (losses), net 409 21 388 377 32

Other income (loss) 124 (83) 207 55 69

Net revenues 3,216 2,466 750 2,496 720

Benefit (provision) for credit losses (426) (752) 326 81 (507)

Credit enhancement expense (416) (399) (17) (373) (43)

Expected credit enhancement recoveries 26 219 (193) 0 26

REO operations expense (41) (14) (27) (61) 20

Credit-related expense (857) (946) 89 (353) (504)

Administrative expense (409) (379) (30) (399) (10)

Other expense (296) (195) (101) (180) (116)

Operating expense (705) (574) (131) (579) (126)

Segment Earnings (Losses) before income tax

(expense) benefit 1,654 946 708 1,564 90

Income tax (expense) benefit (343) (193) (150) (314) (29)

Segment Earnings (Losses), net of taxes 1,311 753 558 1,250 61

Total other comprehensive income (loss), net of tax (3) (2) (1) (3) —

Total comprehensive income (loss) $1,308 $751 $557 $1,247 $61

(1) The financial performance of the company’s Single-Family Guarantee segment is measured based on its contribution to GAAP net income (loss).
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 8 

Key Drivers

Comprehensive income increased from the prior quarter, primarily driven by:

• Higher guarantee fee income primarily due to portfolio growth and increased upfront fee income recognition, 

driven by faster loan prepayments;

• Higher investment gains on sales of reperforming loans; and

• Lower credit-related expense primarily driven by lower provision for credit losses, partially offset by a lower 

benefit from credit enhancement recoveries. 

Business Highlights

• New business activity was $337 billion, an increase of $105 billion, or 45%, from the prior quarter, driven by 

higher refinance and higher purchase activity resulting from record low mortgage interest rates in the third 

quarter of 2020. 

The weighted average original loan-to-value (LTV) ratio of new business activity improved to 71%, from 

72% for the prior quarter, while the weighted average original credit score was 761, up from 758 in the 

prior quarter. 

The average guarantee fee rate charged on new acquisitions was 46 basis points, down from 48 basis 

points for the prior quarter. 

First-time homebuyers represented 46% of new single-family purchase loans.

The company provided funding for 1,153,000 single-family homes, nearly 813,000 of which were refinance 

loans.

• The Single-Family guarantee portfolio increased 11% from September 30, 2019, to $2,179 billion at September 

30, 2020, driven by an increase in U.S. single-family mortgage debt outstanding and strong business activity.

The average guarantee fee rate on the Single-Family guarantee portfolio was 51 basis points, up from 50 

basis points for the prior quarter. 

• The Single-Family serious delinquency rate increased to 3.04%, from 2.48% at the end of the prior quarter, 

driven by loans in forbearance due to the COVID-19 pandemic. 

Single-Family loans in forbearance are reported as delinquent during the forbearance period to the extent 

that payments are past due based upon the loans' original contractual terms.

• Single-Family loan workout activity increased to 193,000, from 89,000 in the prior quarter, driven by completed 

forbearance agreements and payment deferrals primarily related to the COVID-19 pandemic.

• 2.95% of loans in the Single-Family guarantee portfolio, based on loan count, were delinquent and in 

forbearance as of September 30, 2020.

• Credit enhancement coverage of the Single-Family guarantee portfolio decreased to 52% from 54% in the 

prior quarter, driven by the high volume of new business activity, which has not been included in CRT 

transactions but may be included in future periods.

• As of September 30, 2020, 44% of the Single-Family guarantee portfolio was covered by certain CRT 

transactions, and conservatorship capital needed for credit risk on this population was reduced by 

approximately 76% through these CRT transactions based on prescribed CCF guidelines. 
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 9 

Multifamily Segment 

Leading through innovation

Financial Results(1) 

(Dollars in millions) 3Q 2020 2Q 2020 Change 3Q 2019 Change

Net interest income $210 $228 $(18) $292 $(82)

Guarantee fee income 303 442 (139) 294 9

Investment gains (losses), net 1,091 761 330 258 833

Other income (loss) 43 51 (8) 27 16

Net revenues 1,647 1,482 165 871 776

Credit-related expense (20) (84) 64 (5) (15)

Administrative expense (128) (124) (4) (125) (3)

Other expense (9) (9) 0 (14) 5

Operating expense (137) (133) (4) (139) 2

Segment Earnings (Losses) before income tax

(expense) benefit 1,490 1,265 225 727 763

Income tax (expense) benefit (309) (260) (49) (146) (163)

Segment Earnings (Losses), net of taxes 1,181 1,005 176 581 600

Total other comprehensive income (loss), net of tax (4) 58 (62) 10 (14)

Total comprehensive income (loss) $1,177 $1,063 $114 $591 $586

(1) The financial performance of the company’s Multifamily segment is measured based on its contribution to GAAP comprehensive income (loss).

Key Drivers

Comprehensive income increased from the prior quarter, mainly driven by:

• Investment gains (net of other comprehensive income), primarily driven by continued strong margins on 

Multifamily loan commitments, partially offset by

• Lower guarantee fee income driven by higher fair value losses on the guarantee asset as a result of an increase 

in interest rates from the prior quarter. Because most multifamily loans are not prepayable without penalty, 

increases in interest rates generally result in lower Multifamily guarantee asset fair values.

Business Highlights

• New business activity was $18 billion, down 10% from $20 billion in the prior quarter.

In September 2019, FHFA announced a revised loan purchase cap structure for the Multifamily business. 

The loan purchase cap is $100.0 billion for the five-quarter period from the fourth quarter of 2019 through 

the fourth quarter of 2020, and at least 37.5% of the new multifamily loan purchase activity must be 

mission-driven, affordable housing over the same five-quarter period.

As of September 30, 2020, the total cumulative new loan purchase activity subject to the cap was 

$65.5 billion. Approximately 41% of this activity was mission-driven, affordable housing. 

The weighted average original LTV ratio of new business activity was 66%, down from 69% in the prior 

quarter.

The company provided financing for more than 185,000 multifamily rental units.

96% of the eligible multifamily rental units financed were affordable to families earning at or below 120% 

of area median income.

• The Multifamily guarantee portfolio increased 14% from September 30, 2019, to $297 billion, driven by new 

securitization activity. 

• The Multifamily delinquency rate increased to 0.13% from 0.10% in the prior quarter.

Multifamily loans in forbearance are reported as current as long as the borrower is in compliance with the 

forbearance agreement, including the agreed upon repayment plan. Loans in forbearance are therefore not 

included in the Multifamily delinquency rates if the borrower is in compliance with the forbearance 

agreement.
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 10 

• As of September 30, 2020, 2.21% of the loans in the Multifamily mortgage portfolio, based on UPB, were in a 

forbearance program, approximately 90% of which were in the repayment period. Approximately 84% of the 

total loans in a Multifamily forbearance program are included in securitizations with credit enhancement 

provided by subordination.

• Credit enhancement coverage of the Multifamily mortgage portfolio increased to 90% from 87% in the prior 

quarter, as the company continued to successfully transfer multifamily credit risk throughout the third quarter 

of 2020.

• As of September 30, 2020, the company had cumulatively transferred the large majority of expected and stress 

credit risk on the Multifamily guarantee portfolio, primarily through subordination in its securitizations. 

In addition, nearly all of Multifamily's securitization activities shifted substantially all the interest-rate and 

liquidity risk associated with the underlying collateral away from Freddie Mac to third-party investors. 

Capital Markets Segment 

Innovating the distribution of loans and securities into the mortgage market and actively reducing risk for taxpayers

Financial Results(1) 

(Dollars in millions) 3Q 2020 2Q 2020 Change 3Q 2019 Change

Net interest income $20 $152 $(132) $497 $(477)

Investment gains (losses), net 15 206 (191) (292) 307

Other income (loss) 37 (234) 271 (261) 298

Net revenues 72 124 (52) (56) 128

Administrative expense (104) (98) (6) (96) (8)

Other expense (5) (2) (3) (3) (2)

Operating expense (109) (100) (9) (99) (10)

Segment Earnings (Losses) before income tax

(expense) benefit (37) 24 (61) (155) 118

Income tax (expense) benefit 8 (5) 13 33 (25)

Segment Earnings (Losses), net of taxes (29) 19 (48) (122) 93

Total other comprehensive income (loss), net of tax (7) 105 (112) 132 (139)

Total comprehensive income (loss) $(36) $124 $(160) $10 $(46)

(1) The financial performance of the company’s Capital Markets segment is measured based on its contribution to GAAP comprehensive income (loss).

Key Drivers

Comprehensive loss compared to comprehensive income in the prior quarter, primarily due to:

• Lower net interest income primarily driven by higher loan prepayments that resulted in an increase in 

amortization expense, coupled with a change in investment mix as the lower-yielding other investments 

portfolio represented a larger percentage of the total investments portfolio;

• Lower fair value gains on investments (some of which are recorded in other comprehensive income) primarily 

due to an increase in long-term interest rates and spread tightening, partially offset by gains on sales of 

reperforming loans; partially offset by 

• Higher other income from amortization of certain basis adjustments on loans and debt of consolidated trusts. 

Business Highlights

• Freddie Mac continued to maintain a presence in the agency mortgage-related securities market to 

strategically support the guarantee business.

• FHFA has instructed the company to maintain loans in COVID-19 payment forbearance plans in mortgagebacked security pools for at least the duration of the forbearance plan. The company's less liquid assets are 

likely to increase in future periods as it will likely purchase a higher amount of delinquent and modified loans 

from securities after borrowers exit forbearance plans. 
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 11 

Housing Market Support 

Freddie Mac supports the U.S. housing market by executing its Charter Mission to ensure credit availability for new 

and refinanced single-family mortgages as well as for rental housing, and by helping struggling homeowners avoid 

foreclosure. Despite the significant challenges presented by the COVID-19 pandemic, the company continues to 

provide funding and stability to the housing market.

Mortgage Funding – Freddie Mac provided approximately $768 billion in liquidity to the market in the nine months 

ended September 30, 2020, funding: 

• More than 2,506,000 single-family homes, approximately 1,731,000 of which were refinance loans; and

• More than 497,000 multifamily rental units.

Number of Families Helped to Own or Rent a Home

(In thousands)

(1) As of September 30.

Amounts may not add due to rounding.

Preventing Foreclosures – Freddie Mac continued to help struggling borrowers retain their homes or otherwise

avoid foreclosure, completing nearly 293,000 single-family loan workouts in the nine months ended September 30, 

2020 compared to approximately 36,000 in the nine months ended September 30, 2019. 
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 12 

About Freddie Mac’s Conservatorship 

Since September 2008, Freddie Mac has been operating under conservatorship with FHFA as Conservator. The 

support provided by Treasury pursuant to the Purchase Agreement enables the company to maintain access to the 

debt markets and have adequate liquidity to conduct its normal business operations. 

Treasury Draws and Dividend Payments(1)

(Dollars in billions) 

(1) Excludes the initial $1 billion liquidation preference of the senior preferred stock issued to Treasury in September 2008 and the $11.4 billion increase to date in the aggregate 

liquidation preference of the senior preferred stock pursuant to the Letter Agreements. 

(2) As of September 30, 2020.

Amounts may not add due to rounding.

• As a result of the increase in the Capital Reserve Amount pursuant to the September 2019 Letter 

Agreement, the company did not have a dividend requirement to Treasury on the senior preferred stock in 

September 2020, and it will not be required to pay a dividend on the senior preferred stock to Treasury 

until its Net Worth Amount exceeds $20.0 billion.

• Pursuant to the September 2019 Letter Agreement, the liquidation preference of the senior preferred stock 

increased from $82.2 billion to $84.1 billion on September 30, 2020 based on the $1.9 billion increase in 

the Net Worth Amount during the second quarter of 2020, and will increase to $86.5 billion on December 

31, 2020 based on the $2.4 billion increase in the Net Worth Amount during the third quarter of 2020. 

• The amount of funding available to Freddie Mac under the Purchase Agreement remained $140.2 billion at 

September 30, 2020.
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 13 

Additional Information

For more information, including information related to Freddie Mac’s financial results, conservatorship, and related 

matters, see the company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020 and the 

company’s Financial Results Supplement. These documents are available on the Investor Relations page of the 

company’s website at www.FreddieMac.com/investors.

Additional information about Freddie Mac and its business is also set forth in the company’s other filings with the 

SEC, which are available on the Investor Relations page of the company’s website at www.FreddieMac.com/

investors and the SEC’s website at www.sec.gov. Freddie Mac encourages all investors and interested members of 

the public to review these materials for a more complete understanding of the company’s financial results and 

related disclosures.

Webcast Announcement

Management will host a conference call at 9 a.m. Eastern Time on October 29, 2020 to discuss the company’s 

results with the media. The conference call will be concurrently webcast. To access the live audio webcast, use the 

following link: https://edge.media-server.com/mmc/p/vicyf9cw. The replay will be available on the company’s 

website at www.FreddieMac.com/investors for approximately 30 days. All materials related to the call will be 

available on the Investor Relations page of the company’s website at www.FreddieMac.com/investors.

Media Contact: Frederick Solomon (703) 903-3861 Investor Contact: Laurie Garthune (571) 382-4732 

* * * *

This press release contains forward-looking statements, which may include statements pertaining to the 

conservatorship, the company’s current expectations and objectives for its Single-Family Guarantee, Multifamily, 

and Capital Markets segments, its efforts to assist the housing market, liquidity and capital management, 

economic and market conditions and trends, the effects of the COVID-19 pandemic and actions taken in response 

thereto on its business, financial condition, and liquidity, its market share, the effect of legislative and regulatory 

developments and new accounting guidance, credit quality of loans the company owns or guarantees, the costs 

and benefits of the company’s CRT transactions, and results of operations and financial condition on a GAAP, 

Segment Earnings, non-GAAP, and fair value basis. Forward-looking statements involve known and unknown risks 

and uncertainties, some of which are beyond the company’s control. Management’s expectations for the 

company’s future necessarily involve a number of assumptions, judgments, and estimates, and various factors, 

including changes in market conditions, liquidity, mortgage spreads, credit outlook, uncertainty about the duration, 

severity, and effects of the COVID-19 pandemic and actions taken in response thereto, actions by the U.S. 

government (including FHFA, Treasury, Congress, and state and local governments), and the impacts of legislation 

or regulations and new or amended accounting guidance, could cause actual results to differ materially from these 

expectations. These assumptions, judgments, estimates, and factors are discussed in the company’s Quarterly 

Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020, and September 30, 2020, which are 

available on the Investor Relations page of the company’s website at www.FreddieMac.com/investors and the 

SEC’s website at www.sec.gov. The company undertakes no obligation to update forward-looking statements it 

makes to reflect events or circumstances occurring after the date of this press release.

Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. 

Since its creation by Congress in 1970, the company has made housing more accessible and affordable for 

homebuyers and renters in communities nationwide. The company is building a better housing finance system for 

homebuyers, renters, lenders, and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie 

Mac’s blog FreddieMac.com/blog.
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 14 

FREDDIE MAC

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) 

(In millions, except share-related amounts) 3Q 2020 2Q 2020 3Q 2019

Interest income

Mortgage loans $14,134 $15,026 $16,428

Investment securities 659 637 686

Other 56 53 426

Total interest income 14,849 15,716 17,540

Interest expense (11,392) (12,840) (15,130)

Net interest income 3,457 2,876 2,410

Non-interest income (loss)

Guarantee fee income 315 469 280

Investment gains (losses), net 1,122 670 568

Other income (loss) 172 134 121

Non-interest income (loss) 1,609 1,273 969

Net revenues 5,066 4,149 3,379

Benefit (provision) for credit losses (327) (705) 179

Non-interest expense

Salaries and employee benefits (334) (327) (333)

Professional services (105) (88) (115)

Other administrative expense (202) (186) (172)

Total administrative expense (641) (601) (620)

Credit enhancement expense (267) (233) (197)

Expected credit enhancement recoveries 20 221 —

REO operations expense (40) (14) (58)

Temporary Payroll Tax Cut Continuation Act of 2011 expense (467) (442) (408)

Other expense (237) (140) (139)

Non-interest expense (1,632) (1,209) (1,422)

Income (loss) before income tax (expense) benefit 3,107 2,235 2,136

Income tax (expense) benefit (644) (458) (427)

Net income (loss) 2,463 1,777 1,709

Other comprehensive income (loss), net of taxes and reclassification

adjustments

Changes in unrealized gains (losses) related to available-for-sale securities (16) 154 124

Changes in unrealized gains (losses) related to cash flow hedge relationships 6 11 19

Changes in defined benefit plans (4) (4) (4)

Total other comprehensive income (loss), net of taxes and reclassification

adjustments (14) 161 139

Comprehensive income (loss) $2,449 $1,938 $1,848

Net income (loss) $2,463 $1,777 $1,709

Undistributed net worth sweep, senior preferred stock dividends, or future increase

in senior preferred stock liquidation preference (2,449) (1,938) (1,848)

Net income (loss) attributable to common stockholders $14 $(161) $(139)

Net income (loss) per common share — basic and diluted $0.00 $(0.05) $(0.04)

Weighted average common shares outstanding (in millions) — basic and diluted 3,234 3,234 3,234
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 15 

FREDDIE MAC 

Condensed Consolidated Balance Sheets (Unaudited) 

September 30, December 31,

(In millions, except share-related amounts) 2020 2019

Assets

Cash and cash equivalents (includes $1,790 and $991 of restricted cash and cash equivalents) $8,074 $5,189

Securities purchased under agreements to resell 99,252 56,271

Investment securities, at fair value 71,702 75,711

Mortgage loans held-for-sale (includes $12,330 and $15,035 at fair value) 30,585 35,288

Mortgage loans held-for-investment (net of allowance for credit losses of $6,773 and $4,234) 2,189,656 1,984,912

Accrued interest receivable (net of allowance of $107 and $0) 7,583 6,848

Derivative assets, net 1,282 844

Deferred tax assets, net 5,886 5,918

Other assets (includes $5,591 and $4,627 at fair value) 40,051 22,799

Total assets $2,454,071 $2,193,780

Liabilities and equity

Liabilities

Accrued interest payable $6,020 $6,559

Debt (includes $2,798 and $3,938 at fair value) 2,423,316 2,169,685

Derivative liabilities, net 613 372

Other liabilities 10,231 8,042

Total liabilities 2,440,180 2,184,658

Commitments and contingencies

Equity

Senior preferred stock (liquidation preference of $84,090 and $79,322) 72,648 72,648

Preferred stock, at redemption value 14,109 14,109

Common stock, $0.00 par value, 4,000,000,000 shares authorized, 725,863,886 shares

issued and 650,059,292 shares and 650,059,033 shares outstanding — —

Additional paid-in capital — —

Retained earnings (accumulated deficit) (70,015) (74,188)

AOCI, net of taxes, related to:

Available-for-sale securities 1,194 618

Cash flow hedge relationships (214) (244)

Defined benefit plans 54 64

Total AOCI, net of taxes 1,034 438

Treasury stock, at cost, 75,804,594 shares and 75,804,853 shares (3,885) (3,885)

Total equity 13,891 9,122

Total liabilities and equity $2,454,071 $2,193,780

The table below presents the carrying value and classification of the assets and liabilities of consolidated variable interest entities (VIEs) on the

company's condensed consolidated balance sheets.

September 30, December 31,

(In millions) 2020 2019

Condensed Consolidated Balance Sheet Line Item

Assets:

Mortgage loans held-for-investment $2,115,509 $1,940,523

All other assets 81,970 40,598

Total assets of consolidated VIEs $2,197,479 $1,981,121

Liabilities:

Debt $2,138,420 $1,898,355

All other liabilities 5,604 5,537

Total liabilities of consolidated VIEs $2,144,024 $1,903,892
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 16 

FREDDIE MAC

Non-GAAP Reconciliations 

The company’s GAAP net interest income includes the spread earned on its investment activities plus the

guarantee fees earned by its single-family business. Adjusted net interest income is the net spread earned on

the company’s investment activities, including the cost of funds associated with using derivatives. Net interest

yield, GAAP and adjusted, is calculated as annualized quarterly GAAP or adjusted net interest income divided by

the average balance of the underlying assets and liabilities.

Reconciliation of GAAP Net Interest Income to Adjusted Net Interest Income (pre-tax)

(Dollars in millions) 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020

GAAP net interest income $2,410 $3,358 $2,785 $2,876 $3,457

Reclassifications:

Guarantee fee income reclassified to adjusted guarantee fee 

income (1)(2)

(2,486) (2,607) (2,561) (2,943) (3,138)

Accrual of periodic cash settlements reclassified from 

derivative gain (loss) (3)

(47) (129) (176) (329) (540)

Hedge accounting impact (4) 517 (11) 350 475 690

Other reclassifications (5) 395 137 380 301 (239)

Total reclassifications (1,621) (2,610) (2,007) (2,496) (3,227)

Adjusted net interest income $789 $748 $778 $380 $230

Average balance of assets and liabilities, GAAP (in billions) $2,120 $2,162 $2,205 $2,274 $2,376

Average balance of assets and liabilities, adjusted (in billions) $310 $319 $324 $352 $364

The company's GAAP guarantee fees are primarily those generated by the company's multifamily business.

Adjusted guarantee fee income consists of the revenues from guarantee fees from both the Single-Family and

Multifamily businesses, net of the 10 basis point guarantee fee remitted to Treasury as part of the Temporary

Payroll Tax Cut Continuation Act of 2011.

Reconciliation of GAAP Guarantee Fee Income to Adjusted Guarantee Fee Income (pre-tax)

(Dollars in millions) 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020

GAAP guarantee fee income $280 $239 $377 $469 $315

Reclassifications:

Guarantee fee income reclassified from net interest income (1)(2) 2,486 2,607 2,561 2,943 3,138

Temporary Payroll Tax Cut Continuation Act of 2011 expense 

reclassified from other non-interest expense (6)

(408) (420) (432) (442) (467)

Total reclassifications 2,078 2,187 2,129 2,501 2,671

Adjusted guarantee fee income $2,358 $2,426 $2,506 $2,970 $2,986

Columns may not add due to rounding. 

For notes on reclassifications, see page 17 of this press release. 
Freddie Mac Third Quarter 2020 Financial Results 

October 29, 2020 

Page 17 

Notes on Significant Reclassifications

(1) Net guarantee fees, including upfront fees and related hedge amortization and implied guarantee fee income 

related to unsecuritized loans held in the mortgage-related investments portfolio, are reclassified from GAAP net 

interest income to adjusted guarantee fee income.

(2) Short-term returns on cash received related to certain upfront fees on single-family loans are reclassified from 

GAAP net interest income to adjusted guarantee fee income. 

(3) The accrual of periodic cash settlements of derivatives is reclassified from GAAP investment gains (losses), net 

to adjusted net interest income to fully reflect the periodic cost associated with the protection provided by these 

contracts.

(4) Hedge accounting impact consists of removing the effects of hedge accounting including deferred gains and 

losses on closed cash flow hedges related to forecasted debt issuances. 

(5) Other reclassifications primarily relate to items reclassified out of GAAP net interest income, including the 

amortization related to derivative commitment basis adjustments associated with mortgage-related and nonmortgage-related securities, amortization related to accretion of other-than-temporary impairments on availablefor-sale securities, amortization of discounts on loans purchased with deteriorated credit quality that are on 

accrual status, amortization related to premiums and discounts, including non-cash premiums and discounts, on 

single-family loans in trusts and on the associated consolidated securities, amortization related to premiums and 

discounts associated with securities issued by consolidated trusts that were previously held and subsequently 

transferred to third parties, costs associated with STACR debt note expenses, and internally allocated costs 

associated with the refinancing of debt related to Multifamily segment held-for-investment loans which were 

securitized.

(6) The expense related to the Temporary Payroll Tax Cut Continuation Act of 2011 is reclassified from GAAP other 

non-interest expense to adjusted guarantee fee income. As a result of the reclassification, the revenue and 

expense related to the legislated 10 basis point increase are netted within adjusted guarantee fee income.