OTC:FMCC
FEDERAL HOME LOAN MORTGAGE CORP
FMCC is a major player in affordable housing finance, originating mortgages and selling them to investors to fuel home ownership across America.
Key Metrics
Investment Thesis
Bull Case
FMCC offers exposure to the essential housing market with a proven track record of generating consistent billions in net income over the last five years, making it an attractive value play for investors seeking financial sector exposure beyond standard REITs. The company's ability to navigate interest rate cycles while maintaining strong operational cash flows suggests resilience and potential for capital appreciation if housing demand stabilizes.
Bear Case
The massive $108.42 billion in interest expense highlights the company's high leverage and sensitivity to rising rates, which could compress margins significantly if borrowing costs outpace asset yields. Additionally, the substantial retained earnings deficit of -$12.54 billion indicates historical capital erosion that investors must monitor closely before committing new funds.
About FEDERAL HOME LOAN MORTGAGE CORP
Federal Home Loan Mortgage Corp (FMCC) is a federally chartered stock savings and loan holding company that provides affordable housing finance solutions to consumers, builders, and local government entities across the United States. The company generates revenue primarily through origination fees on single-family residential mortgages and guarantees for various mortgage-backed securities sold in the capital markets. Its operations focus on facilitating home purchases and refinancing while maintaining a strong presence in the competitive U.S. financial services sector.
Analysis
Management Discussion
The company reported revenue of $23.27 billion and net income of $10.73 billion for the latest period, reflecting strong origination volumes despite a slight decline from the previous year's peak. Cash flow from operations remained robust at $19.37 billion, though significant cash outflows for financing activities of $24.32 billion indicate ongoing capital deployment or debt restructuring strategies.
Industry Overview
The U.S. residential mortgage market is highly competitive, dominated by large national banks and government-sponsored enterprises that set the pace for lending standards and interest rates. As a federal S&L holding company, FMCC occupies a niche focused on affordable housing goals but faces constant pressure from regulatory shifts and macroeconomic conditions that affect default rates and refinancing activity.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $21.26B | $21.23B | $23.91B | $23.27B |
| Cost of Revenue | $0 | $0 | $0 | $0 |
| Gross Profit | $21.26B | $21.23B | $23.91B | $23.27B |
| Operating Expenses | $9.66B | $8.03B | $9.13B | $9.91B |
| Operating Income | $11.60B | $13.20B | $14.78B | $13.36B |
| G&A | — | — | — | $2.89B |
| Other OpEx | — | — | — | $7.02B |
| Non-Operating Income | $0 | $0 | $0 | $0 |
| Interest Expense | $65.45B | $86.82B | $98.14B | $108.42B |
| Pre-Tax Income | $11.60B | $13.20B | $14.78B | $13.36B |
| Income Tax | $2.28B | $2.66B | $2.92B | $2.63B |
| Continuing Ops | $9.33B | $10.54B | $11.86B | $10.73B |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $9.33B | $10.54B | $11.86B | $10.73B |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $9.33B | $10.54B | $11.86B | $10.73B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Total Assets | $3.21T | $3.28T | $3.39T | $3.50T |
| Total Liabilities | $3.17T | $3.23T | $3.33T | $3.43T |
| Shareholders' Equity | $37.02B | $47.72B | $59.58B | $70.38B |
| Retained Earnings | $-45.67B | $-35.13B | $-23.27B | $-12.54B |
| AOCI | $-188.0M | $-22.0M | $-27.0M | $51.0M |
| Treasury Stock | $3.88B | $3.88B | $3.88B | $3.88B |
| Total L&E | $3.21T | $3.28T | $3.39T | $3.50T |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $9.33B | $10.54B | $11.86B | $10.73B |
| Non-Cash Adjustments | $1.27B | $-5.82B | $-7.35B | $6.65B |
| Working Capital Changes | $1.33B | $2.90B | $2.12B | $2.00B |
| Cash from Operations | $11.93B | $7.62B | $6.63B | $19.37B |
| Cash from Investing | $11.40B | $44.25B | $9.62B | $4.74B |
| Cash from Financing | $-27.11B | $-52.21B | $-16.74B | $-24.32B |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $-3.79B | $-341.0M | $-485.0M | $-207.0M |
| Beginning Cash | $10.15B | $6.36B | $6.02B | $5.53B |
| Ending Cash | $6.36B | $6.02B | $5.53B | $5.33B |
Frequently Asked Questions
How does FEDERAL HOME LOAN MORTGAGE CORP make money?
The company operates through residential mortgage origination and servicing, guaranteeing securitization pools for government-sponsored enterprises, commercial lending and asset management, and financial services including consumer loans and insurance products.
What are the main risks for FMCC?
Interest rate volatility significantly impacts net interest margins and loan demand, regulatory changes from federal housing agencies could alter operational requirements or capital thresholds, credit risk increases in the event of widespread borrower defaults affecting guaranteed securities portfolios, and competition from large commercial banks limits market share growth for traditional mortgage products.
What is FMCC's competitive advantage?
FMCC leverages its exclusive charter as a federal stock S&L holding company to offer unique affordable housing initiatives, maintains deep relationships with government-sponsored enterprises like Fannie Mae and Freddie Mac, and benefits from a diversified revenue stream that includes both origination fees and servicing income.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.