Federal Home Loan Mortgage Corporation (Freddie Mac)
American government-sponsored enterprise that purchases and guarantees mortgages in the secondary market, providing liquidity to the U.S. housing finance system.
Company Type
public
Founded
1970
Headquarters
McLean, Virginia, USA
Stock
OTC: FMCC
About Federal Home Loan Mortgage Corporation (Freddie Mac)
Who owns Freddie Mac?
Freddie Mac's ownership is complex. The company has been under conservatorship of the Federal Housing Finance Agency (FHFA) since September 2008. The U.S. Treasury holds senior preferred stock representing the government's financial stake. Common stock (FMCC) trades on OTC markets but has limited economic rights under conservatorship.
Freddie Mac's ownership is complex. The company has been under conservatorship of the Federal Housing Finance Agency (FHFA) since September 2008. The U.S. Treasury holds senior preferred stock representing the government's financial stake. Common stock (FMCC) trades on OTC markets but has limited economic rights under conservatorship.
Is Freddie Mac publicly traded?
Freddie Mac's common stock (FMCC) and preferred stock trade on the OTC markets, but the company has been under FHFA conservatorship since 2008. The common and preferred shares have limited economic rights under conservatorship, and the U.S. Treasury's senior preferred stock takes priority.
Freddie Mac's common stock (FMCC) and preferred stock trade on the OTC markets, but the company has been under FHFA conservatorship since 2008. The common and preferred shares have limited economic rights under conservatorship, and the U.S. Treasury's senior preferred stock takes priority.
What is Freddie Mac's role in the housing market?
Freddie Mac operates in the secondary mortgage market, purchasing mortgages from lenders and packaging them into mortgage-backed securities (MBS). This process provides lenders with cash to make new loans, ensuring that mortgage credit is available to qualified borrowers. Freddie Mac and Fannie Mae together guarantee approximately 70% of new U.S. mortgage originations.
Freddie Mac operates in the secondary mortgage market, purchasing mortgages from lenders and packaging them into mortgage-backed securities (MBS). This process provides lenders with cash to make new loans, ensuring that mortgage credit is available to qualified borrowers. Freddie Mac and Fannie Mae together guarantee approximately 70% of new U.S. mortgage originations.
When was Freddie Mac founded?
Freddie Mac was created in 1970 by the U.S. Congress through the Emergency Home Finance Act. The company was reorganized as a shareholder-owned corporation in 1989 and its shares began trading on the NYSE. It was placed into FHFA conservatorship in September 2008.
Freddie Mac was created in 1970 by the U.S. Congress through the Emergency Home Finance Act. The company was reorganized as a shareholder-owned corporation in 1989 and its shares began trading on the NYSE. It was placed into FHFA conservatorship in September 2008.
What is Freddie Mac's net income?
In FY2024, Freddie Mac reported net income of approximately $9.3 billion, continuing its pattern of strong profitability under conservatorship.
In FY2024, Freddie Mac reported net income of approximately $9.3 billion, continuing its pattern of strong profitability under conservatorship.
What is the difference between Freddie Mac and Fannie Mae?
Freddie Mac (Federal Home Loan Mortgage Corporation, 1970) and Fannie Mae (Federal National Mortgage Association, 1938) are both GSEs that operate in the secondary mortgage market. Freddie Mac was originally created to purchase mortgages from savings institutions (thrifts), while Fannie Mae primarily purchased mortgages from commercial banks. Today, both companies operate in similar markets and are under FHFA conservatorship since September 2008.
Freddie Mac (Federal Home Loan Mortgage Corporation, 1970) and Fannie Mae (Federal National Mortgage Association, 1938) are both GSEs that operate in the secondary mortgage market. Freddie Mac was originally created to purchase mortgages from savings institutions (thrifts), while Fannie Mae primarily purchased mortgages from commercial banks. Today, both companies operate in similar markets and are under FHFA conservatorship since September 2008.
History of Federal Home Loan Mortgage Corporation (Freddie Mac)
Freddie Mac was created by the U.S. Congress through the Emergency Home Finance Act of 1970. The Federal Home Loan Mortgage Corporation was established to expand the secondary mortgage market and increase competition with Fannie Mae, which had been privatized in 1968.
The original purpose of Freddie Mac was to purchase mortgages from savings institutions (thrifts), which were the primary mortgage lenders at the time. By purchasing mortgages from thrifts, Freddie Mac provided those institutions with cash to make new loans, increasing the availability of mortgage credit.
In its early years, Freddie Mac was owned by the Federal Home Loan Bank System, which regulated savings institutions. The company operated primarily in the conventional mortgage market, purchasing mortgages that did not qualify for government insurance programs.
Freddie Mac pioneered the development of mortgage-backed securities (MBS) in the 1970s. The company's first MBS, called a Participation Certificate (PC), was issued in 1971. This innovation allowed investors to purchase interests in pools of mortgages, dramatically increasing the flow of capital into the housing market.
In 1989, Congress reorganized Freddie Mac as a shareholder-owned corporation under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). The company's shares began trading on the New York Stock Exchange in 1989.
Throughout the 1990s, Freddie Mac expanded its operations significantly, growing its mortgage portfolio and MBS guarantees. The company developed innovative affordable housing products and invested in technology to improve its mortgage processing capabilities.
In 2003, Freddie Mac disclosed that it had understated earnings by approximately $5 billion over the previous three years due to accounting irregularities. The company's CEO and other senior executives were forced to resign, and the company paid significant fines and restated its financial results.
Freddie Mac's growth in the 2000s was accompanied by increasing risk-taking, particularly in the subprime and Alt-A mortgage markets. The company purchased and guaranteed large volumes of higher-risk mortgages as it sought to maintain market share and meet affordable housing goals.
When the U.S. housing market collapsed in 2007-2008, Freddie Mac suffered massive losses on its mortgage portfolio and MBS guarantees. The company's capital was insufficient to absorb these losses, threatening its ability to continue operations.
On September 7, 2008, the U.S. government placed Freddie Mac and Fannie Mae into conservatorship under the newly created Federal Housing Finance Agency (FHFA). The U.S. Treasury committed to providing financial support to ensure the companies' continued operations.
Under conservatorship, Freddie Mac has returned to profitability and has repaid more than $120 billion to the U.S. Treasury through dividend payments on the senior preferred stock. Despite this repayment, the conservatorship remains in place.
Diana Reid became CEO in 2023. In FY2024, Freddie Mac reported net income of approximately $9.3 billion.
Brands Owned by Federal Home Loan Mortgage Corporation (Freddie Mac)
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Stock Information
Federal Home Loan Mortgage Corporation (Freddie Mac) Ownership: Pros & Cons
Advantages
- +FY2024 net income of approximately $9.3 billion demonstrates strong profitability under conservatorship
- +Critical role in providing liquidity to the U.S. housing market, supporting homeownership and rental housing for millions of Americans
- +Government backing through FHFA conservatorship provides stability and implicit guarantee
- +Loan Product Advisor (LPA) automated underwriting system is used by thousands of lenders, creating significant market infrastructure
- +Has repaid more than $120 billion to the U.S. Treasury through dividend payments
Considerations
- -Conservatorship since 2008 creates uncertainty about the company's long-term structure and ownership
- -Subject to significant political and regulatory risk, with ongoing debate about GSE reform
- -Common and preferred shareholders have limited economic rights under conservatorship
- -2003 accounting scandal damaged the company's reputation for financial integrity
- -Concentration of mortgage market risk in two GSEs (Freddie Mac and Fannie Mae) creates systemic risk concerns
Frequently Asked Questions About Federal Home Loan Mortgage Corporation (Freddie Mac)
Who owns Freddie Mac?
Freddie Mac's ownership is complex. The company has been under conservatorship of the Federal Housing Finance Agency (FHFA) since September 2008. The U.S. Treasury holds senior preferred stock representing the government's financial stake. Common stock (FMCC) trades on OTC markets but has limited economic rights under conservatorship.
Is Freddie Mac publicly traded?
Freddie Mac's common stock (FMCC) and preferred stock trade on the OTC markets, but the company has been under FHFA conservatorship since 2008. The common and preferred shares have limited economic rights under conservatorship, and the U.S. Treasury's senior preferred stock takes priority.
What is Freddie Mac's role in the housing market?
Freddie Mac operates in the secondary mortgage market, purchasing mortgages from lenders and packaging them into mortgage-backed securities (MBS). This process provides lenders with cash to make new loans, ensuring that mortgage credit is available to qualified borrowers. Freddie Mac and Fannie Mae together guarantee approximately 70% of new U.S. mortgage originations.
When was Freddie Mac founded?
Freddie Mac was created in 1970 by the U.S. Congress through the Emergency Home Finance Act. The company was reorganized as a shareholder-owned corporation in 1989 and its shares began trading on the NYSE. It was placed into FHFA conservatorship in September 2008.
What is Freddie Mac's net income?
In FY2024, Freddie Mac reported net income of approximately $9.3 billion, continuing its pattern of strong profitability under conservatorship.
What is the difference between Freddie Mac and Fannie Mae?
Freddie Mac (Federal Home Loan Mortgage Corporation, 1970) and Fannie Mae (Federal National Mortgage Association, 1938) are both GSEs that operate in the secondary mortgage market. Freddie Mac was originally created to purchase mortgages from savings institutions (thrifts), while Fannie Mae primarily purchased mortgages from commercial banks. Today, both companies operate in similar markets and are under FHFA conservatorship since September 2008.
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