Freddie Mac’s net income declined on a quarter-over-quarter basis to $1.4 billion in the second quarter from $4 billion in the first, with the decrease driven largely by lower income from legal settlements related to private label securities (PLS).

Those settlements contributed $0.4 billion to Freddie Mac’s pre-tax income in the second quarter, compared with $4.5 billion in the first. Freddie Mac’s settlements of representation and warranty claims had a minimal impact on the company’s pre-tax income in the second quarter, compared with a $0.3 billion benefit in the first.

The government-sponsored entity posted comprehensive income of $1.9 billion, compared with $2.6 billion in the first quarter this year, with that decline mostly driven by lower quarterly net income.

The second quarter’s losses also reflected lower derivative losses of $1.9 billion versus $2.4 billion in the first quarter, the GSE said in a statement.

In a statement accompanying its earnings release, the GSE said that the earnings it experienced in recent periods are not sustainable over the long term. During 2013 and through the first quarter of this year, Freddie Mac reported quarterly comprehensive income ranging from $4.4 billion to $30.4 billion. The GSE’s financial results last year included a significant benefit related to the release of the deferred tax asset valuation allowance. Those financial results also included legal settlements of PLS litigation and representation and warranty claims. Freddie Mac’s financial results during those periods also benefited significantly from strong home price appreciation, which is moderating.

Additionally, declines in the size of the company’s mortgage-related investments portfolio, as required by FHFA and the Purchase Agreement with Treasury, will reduce earnings over time.