Yesterday, Freddie Mac reported net income of $768 million for the quarter ended June 30, 2009, compared to a net loss of $9.9 billion for the first quarter. After a $1.1 billion dividend payment on its senior preferred stock to the U.S. Department of the Treasury, Freddie Mac reported a net loss per diluted common share of $0.11 in the second quarter of 2009, compared to a net loss per diluted common share of $3.14 in the first quarter. Despite the profitable results, Interim Chief Executive Officer John Koskinen stated that the company's outlook "remains cautious due to rising foreclosures, growing unemployment, tight lending standards and buyers' reluctance to re-enter the market." Freddie Mac’s earnings announcement follows Fannie Mae's $14.8 billion second quarter loss reported on Thursday.
Because Freddie Mac also reported a positive net worth of $8.2 billion at June 30, 2009, it does not require any additional funding this quarter from Treasury under the terms of the Senior Preferred Stock Purchase Agreement, established when Freddie Mac was placed into conservatorship in September 2008. As of June 30, 2009, the aggregate liquidation preference of the senior preferred stock held by Treasury was $51.7 billion, entitling Treasury to annual cash dividends of approximately $5.2 billion. Including the $1.1 billion quarterly dividend on the senior preferred stock paid on June 30, the company has paid an aggregate amount of $1.7 billion in cash on the senior preferred stock to Treasury at the direction of its conservator, the Federal Housing Finance Agency. The amount remaining under Treasury's $200 billion funding commitment is $149.3 billion, which does not include the $1 billion of senior preferred stock issued to Treasury as initial consideration for its funding commitment.
In its Form 10-Q filed with the SEC, Freddie Mac stated that its second quarter results were driven primarily by $4.3 billion in net interest income, mainly due to lower funding costs, as well as $4.2 billion in gains on its derivative portfolio and guarantee asset, which were primarily driven by net mark-to-market gains due to increases in long-term interest rates. In addition, during the second quarter, Freddie Mac provided $171 billion of liquidity to the mortgage market, helping to finance more than 720,000 single-family homes and nearly 100,000 units of rental housing; helped refinance approximately 28,500 loans under the Freddie Mac Relief Refinance MortgageSM; and helped approximately 45,000 borrowers stay in their homes or sell their properties, including approximately 16,000 borrowers who were placed in trial period payment plans under the Home Affordable Modification Program.