Wednesday, May 08, 2013

Freddie Mac on Q1: $4.6 Billion Net Income, No Treasury Draw, REO Declines

by Bill McBride on 5/08/2013 11:28:00 AM

From Freddie Mac: Freddie Mac Reports Net Income of $4.6 BILLION;

Freddie Mac today reported net income of $4.6 billion for the first quarter of 2013, compared to net income of $4.5 billion for the fourth quarter of 2012. ...
On a quarterly basis, the company determines whether a valuation allowance is necessary on its net deferred tax assets. After evaluating all available evidence, Freddie Mac continued to record a valuation allowance on a portion of its net deferred tax assets as of March 31, 2013. The valuation allowance as of March 31, 2013, was $30.1 billion. To the extent Freddie Mac releases the valuation allowance on its deferred tax assets in a future period, the amount released would be included as income in that period and would result in a corresponding increase in the company’s net worth as of the end of that period.
(Provision) benefit for credit losses was a benefit of $503 million for the first quarter of 2013, compared to a benefit of $700 million for the fourth quarter of 2012. The benefit for credit losses for the first quarter of 2013 was driven by continued improvement in national home prices combined with a further decrease in the volume of newly delinquent single-family loans.
Freddie REO Click on graph for larger image.

On Real Estate Owned (REO), Freddie acquired 17,882 properties in Q1 2013, and disposed of 18,895 and the total REO fell to 47,974 at the end of Q1.  This graph shows REO inventory for Freddie.

From Freddie:
In 1Q13, REO dispositions continued to exceed the volume of REO acquisitions. The volume of our single-family REO acquisitions in recent periods has been significantly affected by the length of the foreclosure process and a high volume of foreclosure alternatives, which result in fewer loans proceeding to foreclosure, and thus fewer properties transitioning to REO.

The North Central region comprised 42 percent of our REO property inventory at March 31, 2013. This region generally has experienced more challenging economic conditions, and includes a number of states with longer foreclosure timelines due to the local laws and foreclosure process in the region.