by Calculated Risk on 2/27/2014 02:10:00 PM

From Freddie Mac: FREDDIE MAC REPORTS NET INCOME OF $48.7 BILLION FOR FULL-YEAR 2013; COMPREHENSIVE INCOME OF $51.6 BILLION

• Full-year net income and comprehensive income totaled $48.7 billion and $51.6 billion, respectively
• Fourth quarter net income and comprehensive income totaled $8.6 billion and $9.8 billion, respectively – the company’s ninth consecutive quarter of positive net income and comprehensive income
• Financial results were positively impacted by the following significant items:

• Full-year tax benefit of $23.3 billion driven by release of deferred tax asset valuation allowance
• Pre-tax benefit of legal settlements of $6.0 billion for fourth quarter and $7.7 billion for full year
• Continued improvement in home prices which contributed to reduced loan loss provisioning
• Fair value gains on derivative portfolio and non-agency mortgage-related securities

• Recent level of earnings is not sustainable over the long term
emphasis added

There were significant one time gains (tax assets, legal settlements).

Click on graph for larger image.

Here is a graph of Fannie and Freddie REO. This was the second consecutive quarterly increase in REO.

Freddie’s SF REO inventory declined over the year, and the recent increase might be seasonal. From Freddie:

In 2013, REO inventory declined primarily due to lower single-family foreclosure activity as a result of Freddie Mac’s loss mitigation efforts and a declining amount of delinquent loans.

Freddie Mac experienced an increase in REO acquisitions during 2013 compared to 2012 in the Northeast region and REO acquisitions remained high in the Southeast region. High REO acquisition volumes in these regions were primarily due to higher foreclosure volume in Maryland, Pennsylvania and Florida.