Freddie Mac

Type: Public
Founded: 1970
Headquarters: McLean, VA
Key people: Richard Syron, Chairman & CEO; Eugene McQuade, President & COO
Industry: Credit Services
Products: Financial Services
Website: www.freddiemac.com

General Information

The Federal Home Loan Mortgage Corporation ('FHLMC') NYSE: FRE, commonly known as Freddie Mac, is a government-sponsored enterprise (GSE) sponsored by the United States Government. As a GSE, it is a privately-owned corporation authorized to make loans and loan guarantees. It is not backed or funded by the US Government, nor do the securities it issues benefit from any government guarantee or protection.

The FHLMC was created in 1970 to expand the secondary market for mortgages in the United States. Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market.

This secondary mortgage market helps to replenish the supply of lendable money for mortgages and ensures that money continues to be available for new home purchases. The name 'Freddie Mac' is a creative acronym-portmanteau of the company's full name that has been adopted officially for ease of identification (see 'Companies' below for other examples).

History

From 1938 to 1968, the secondary mortgage market in the United States was monopolized by the Federal National Mortgage Association (Fannie Mae), which had up until then been a government agency. In 1968, to help balance the federal budget, part of Fannie Mae was converted into a private corporation. To provide competition in the secondary mortgage market, and to prevent Fannie Mae from continuing to have a monopoly, Congress chartered Freddie Mac as a private corporation to compete in this same market.