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Federal
Home Loan Mortgage Corporation
Type: Public
Founded: 1970
Location: McLean, VA
Key people: Richard Syron, CEO & Chairman
Industry: Mortgage Investment
Products: Financial Services
Revenue: $36.8 billion (2003)
Employees: 5,000
Website: www.freddiemac.com
The Federal Home Loan Mortgage Corporation
("Freddie Mac") NYSE: FRE, a government sponsored enterprise,
is a stockholder-owned, publicly-traded company chartered by the
United States federal government in 1970 to purchase mortgages and
related securities, and then issue securities and bonds in financial
markets backed by those mortgages in secondary markets. Freddie
Mac, like its competitor Fannie Mae is regulated by the Office of
Federal Housing Enterprise Oversight (OFHEO) in the United States
Department of Housing and Urban Development.
Freddie Mac makes money by charging a guarantee
fee which is usually a small part of the interest payment of the
loans they have securitized into bonds. (For example, Freddie Mac
may purchase a loan with a rate of 5.19 percent and put it into
a mortgage backed security (MBS) bond which has a 5.0 percent coupon,
keeping 0.19 percent as the guarantee fee.) Investors, or purchasers
of Freddie Mac MBS, are willing to let Freddie Mac keep this fee
in exchange for assuming the credit risk, that is, Freddie's guarantee
that the principal of the underlying loan will be paid back regardless
of whether the borrower actually repays. This is how Freddie Mac
began making money at its inception and continues to do so today.
But today, the majority of Freddie Mac's income is derived from
the interest rate difference in the corporate debt Freddie Mac issues
and the MBS that Freddie Mac's retained portfolio purchases.
The company is based in McLean, Virginia.
* 1 Credit rating
* 2 Investigations
* 3 Awards
Credit rating
* Senior Long-Term Debt: AAA Aaa AAA
* Short-Term Debt A-1+ Prime-1 F-1+
* Subordinated Debt AA- Aa2 AA-
* Preferred Stock AA- Aa3 AA- Watch Negative
* Risk-To-The-Government AA- Not Applicable Not Applicable
* Bank Financial Strength Not Applicable A- Not Applicable
Investigations
As of 2004, Freddie Mac is under investigation
for creative accounting practices that may have been aimed more
at protecting figures than actually managing risk.
Awards
Freddie Mac was named one of the 100 Best Companies
for Working Mothers in 2004 by Working Mothers magazine.
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