Freddie Mac

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Freddie Mac
Freddie Mac logo.png
Founded 1970
Headquarters McLean, Virginia
Products Mortgage Securitization
Web site www.freddiemac.com

Freddie Mac is the common name for the Federal Home Loan Mortgage Corporation (FHLMC), a publicly traded company that operates under a federal charter. It is the nation's second largest mortgage buyer, after its rival, Fannie Mae. Like Fannie Mae, Freddie Mac buys mortgages from lending institutions and then either holds them in investment portfolios or resells them as mortgage-backed securities to investors. The two companies played a vital role in providing financing for the housing markets until they were seized by the government in September 2008 after mounting loan defaults led to enormous losses.[1]

Both companies now operate under conservatorship, a legal process that gives the Federal Housing Finance Agency (FHFA) the power ordinarily held by shareholders and boards.

On Aug. 8, 2011 Standard & Poor's (S&P) downgraded the credit ratings of Fannie Mae, Freddie Mac and several other U.S. government entities, reflecting their dependence on federal support.[2]

History

In March of 2009, Freddie said it would need a $31 billion injection of capital from the Treasury after receiving nearly $14 billion the previous year. The government agreed to pump up to $200 billion into each company to keep them afloat.

Both Fannie Mae and Freddie Mac are still required to play a vital role in foreclosure prevention while also providing a steady flow of capital to banks to make new mortgages. Together, they own or guarantee about half the $11 trillion in home loans.[3]

On June 17 of 2010, Fannie Mae and Freddie Mac were delisted from the New York Stock Exchange.[4]

Freddie Mac said on June 25 or 2010 that Executive Vice President Michael Perlman had been terminated. No reason was given for his departure.[5]

On July 2, 2010, it was reported that Fannie Mae and Freddie Mac have paid $635 million in fees to banks this year making them Wall Street's biggest capital markets customers in the first half of 2010.[6]

Products and Services

Membership

Key People

Freddie Mac confirmed on July 22, 2009 that Charles E. Haldeman Jr. will take over as chief executive of the company, becoming Freddie Mac's fourth chief executive in less than a year.[7]

References

  1. Freddie Mac Executive VP Dismissed. The Daily News.
  2. S&P Cuts U.S. Government Entities. WSJ.com.
  3. Haldeman Will Be New CEO at Freddie. The Wall Street Journal.
  4. Fannie, Freddie to delist from NYSE. CNN Money.
  5. Freddie Mac Executive VP Dismissed. Yahoo News.
  6. Fannie and Freddie are top Wall Street customers. FT.
  7. Haldeman Will Be New CEO at Freddie. The Wall Street Journal.