Freddie Mac bought $98 billion in single-family mortgages in the third quarter, surpassing the larger Fannie Mae, which purchased $88 billion. The shift puts Freddie Mac back in front as the two government-sponsored enterprises compete for mortgage business, a contest that can shape lender incentives and underwriting. But rising delinquencies and changes in credit-loss provisions underscore limits on how far either company can widen access to credit.
Freddie Mac Chief Financial Officer Jim Whitlinger said on the earnings call that the company is strengthening its financial position while continuing to focus on prudent decisions and risk management. He said financial strength helps Freddie Mac provide liquidity through economic cycles, support sustainable homeownership, and improve the efficiency and affordability of housing finance.
Portfolio metrics show slightly different borrower profiles
Whitlinger said Freddie Mac’s existing mortgage portfolio had a weighted-average current loan-to-value ratio (LTV) of 54% and a corresponding credit score of 755. Fannie Mae reported a credit score of 753 and a market-adjusted LTV of 51%. Current and market-adjusted LTVs reflect factors including home-price changes and borrower repayments, so they are not directly comparable with original LTVs at loan origination. Fannie Mae has previously said its weighted-average original LTV is typically higher, with a long-term average of about 78%.
These figures describe the companies’ outstanding portfolios, not the underwriting standards applied to loans purchased during the quarter. Whitlinger said the year-over-year increase in serious delinquencies was driven mainly by loans originated from 2022 to 2024. Some delinquency measures rose across both companies’ single-family and multifamily portfolios, keeping credit risk in focus as they compete for mortgage volume.
BTIG analysts noted a larger-than-expected swing in Freddie Mac’s credit-loss line this quarter: the company moved from a $900 million benefit to an $800 million provision. Fannie Mae also shifted from a credit-loss benefit to a provision during the period. Serious delinquencies on single-family loans at both companies remain below 1% and at historically low levels, but the deterioration in the measures may constrain any easing of underwriting.
VantageScore 4.0 used on a share of new purchases
Both GSEs give lenders the option to use the updated VantageScore 4.0 credit score in mortgage pricing. Some mortgage companies say the measure has helped certain borrowers qualify for loans. Whitlinger said about 6% of the loans Freddie Mac purchased in the third quarter used the score.
The option gives lenders another way to assess borrowers, but does not amount to a broad loosening of credit standards. Freddie Mac and Fannie Mae still have to balance wider borrower access against portfolio risk. Recent delinquency trends and changes in credit-loss provisions are among the constraints on that balance.
Earnings rise, but capital shortfalls remain
Freddie Mac’s third-quarter net income rose about 17% year over year to $3.2 billion. Fannie Mae reported the previous day that net income increased 8% to $4.2 billion, its highest since 2023. After its quarterly profit, Freddie Mac’s net worth reached $81 billion. Both companies have remained profitable over the long period since entering conservatorship in 2008, but earnings growth has not resolved their capital shortfalls.
Whitlinger said Freddie Mac’s capital shortfall was $98 billion at the end of the third quarter of 2026, before buffer requirements, largely because $73 billion in senior preferred stock does not count as regulatory capital. Keefe, Bruyette & Woods analysts said that excluding this senior preferred stock would still leave Freddie Mac about $21 billion below its statutory minimum. They also noted that Freddie Mac’s capital remains subordinate to government-held senior preferred stock and its liquidation preference. Any future exit from conservatorship would need to address those senior claims, for example through a waiver or conversion.
At the time of publication on Thursday, Freddie Mac shares were up slightly more than 12% at $4.09, while Fannie Mae shares had gained about 8% to $4.48. Investors are tracking not only mortgage purchases and earnings, but also delinquency trends, capital shortfalls, and the capital arrangements required for a potential end to conservatorship.