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Encyclopedia > Federal Home Loan Mortgage Corporation
Freddie Mac (Federal Home Loan and Mortgage Corporation)
Type Public
Founded 1970
Headquarters McLean, VA
Key people Richard Syron, Chairman & CEO; Eugene McQuade, President & COO
Industry Credit Services
Products Financial Services
Revenue $44.00 billion (2006)
Employees 5,000
Website www.freddiemac.com

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. This article does not cite any references or sources. ... Year 1970 (MCMLXX) was a common year starting on Thursday (link shows full calendar) of the Gregorian calendar. ... McLean is an unincorporated community located in Fairfax County, Virginia. ... Richard Francis Syron was born in Boston on October 25, 1943. ... Financial services is a term used to refer to the services provided by the finance industry. ... Look up revenue in Wiktionary, the free dictionary. ... For the album by the Kaiser Chiefs see Employment (album) Employment is a contract between two parties, one being the employer and the other being the employee. ... A website (alternatively, Web site or web site) is a collection of Web pages, images, videos and other digital assets that is hosted on one or several Web server(s), usually accessible via the Internet, cell phone or a LAN. A Web page is a document, typically written in HTML... The New York Stock Exchange (NYSE), nicknamed the Big Board, is a New York City-based stock exchange. ... The government sponsored enterprises (GSEs) are a group of financial services corporations created by the United States Congress. ... The government of the United States, established by the United States Constitution, is a federal republic of 50 states, a few territories and some protectorates. ...


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. Year 1970 (MCMLXX) was a common year starting on Thursday (link shows full calendar) of the Gregorian calendar. ... The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. ... This article is about the legal mechanism used to secure property in favor of a creditor. ... A mortgage-backed security (MBS) is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans. ...


Along with other GSEs, Freddie Mac purchases mortgages and related securities, and then issue securities and bonds in financial markets backed by those mortgages in secondary markets. This article is about the legal mechanism used to secure property in favor of a creditor. ...


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). A market in which existing mortgages and mortgage-backed securities are traded. ... It has been suggested that this article or section be merged with Backronym and Apronym (Discuss) Acronyms and initialisms are abbreviations, such as NATO, laser, and ABC, written as the initial letter or letters of words, and pronounced on the basis of this abbreviated written form. ... A portmanteau (IPA pronunciation: RP, US) is a word or morpheme that fuses two or more words or word parts to give a combined or loaded meaning. ...

Contents

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. The Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, is a government sponsored enterprise (GSE) sponsored by the United States government. ... A congressional charter is a law passed by the United States Congress that states the mission, authority and activities of a group. ...


Business

Freddie Mac's primary method for making money is by charging a guarantee fee on loans that they have purchased and securitized into Mortgage-backed security bonds. 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 Mac's guarantee that the principal and interest on the underlying loan will be paid back regardless of whether the borrower actually repays. A mortgage-backed security (MBS) is an asset-backed security whose cash flows are backed by the principal and interest payments of a set of mortgage loans. ...


Freddie Mac securities carry no government guarantee of being repaid. This is explicitly stated in the law that authorizes GSEs, on the securities themselves, and in many public communications issued by Freddie Mac. Despite this, there is a wide misperception that these notes carry some sort of implied government guarantee, and the vast majority of investors believe that the Government would prevent them from defaulting on their debt.

Principal and interest payments are not guaranteed by and are not debts or obligations of the United States or any federal agency or instrumentality other than Freddie Mac.

Both Alan Greenspan and Ben Bernanke have spoken publicly in favor of greater regulation of the GSEs, due to the size of their holdings and the widespread misperception that they are government backed. Freddie Mac is currently regulated by the U.S. Department of Housing and Urban Development (HUD) and its Office of Federal Housing Enterprise Oversight (OFHEO). The United States House of Representatives recently passed HR 1427 (Federal Housing Finance Reform Act of 2007) which would consolidate oversight for Freddie, Fannie, and the Federal Home Loan Banks into a single regulator.[1] [2]. Alan Greenspan (born March 6, 1926) is an American economist and was Chairman of the Board of Governors of the Federal Reserve of the United States from 1987 to 2006. ... Ben Shalom Bernanke[1] (born December 13, 1953) (pronounced ber-NAN-kee, bər-nan-kē or ), is an American economist and current Chairman of the Board of Governors of the United States Federal Reserve. ... The United States Department of Housing and Urban Development, often abbreviated HUD, is a Cabinet department of the United States government. ... The primary mission of the U.S. Office of Federal Housing Enterprise Oversight (OFHEO) is ensuring the capital adequacy and financial safety and soundness of two government-sponsored enterprises -- the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). ... The United States House of Representatives (or simply the House) is one of the two chambers of the United States Congress; the other is the Senate. ... The Federal Home Loan Banks provide stable, on-demand, low-cost funding to American financial institutions for home mortgage loans, small business, rural, agricultural, and economic development lending. ...


Conforming loans

OFHEO annually sets the limit of the size of a conforming loan based on the October to October changes in mean home price, above which a mortgage is considered a non-conforming jumbo loan. The GSEs are only allowed to buy loans that are conforming, which limits secondary market competion for non-conforming loans. By virtue of the laws of supply and demand, then, it is harder for lenders to sell the loans, thus it would cost more to the consumers (typically 1/4 to 1/2 of a percent, but can be more due to credit market conditions). The conforming loan limit is 50 percent higher in high-cost areas such as Alaska, Hawaii, Guam and the US Virgin Islands, and is also higher for 2-4 unit properties on a graduating scale. Conforming Loan Because of its stake in the mortgage market and because of its history, Fannie Mae and Freddie Mac set the limit each year on the size of a conforming loan based on the October-to-October changes in mean home price, above which a mortgage is considered a... A jumbo mortgage is a mortgage with a loan amount above conventional conforming loan limits. ... Official language(s) English[1] Spoken language(s) English 85. ... Official language(s) English, Hawaiian Capital Honolulu Largest city Honolulu Area  Ranked 43rd  - Total 10,931 sq mi (29,311 km²)  - Width n/a miles (n/a km)  - Length 1,522 miles (2,450 km)  - % water 41. ...


Credit rating

See [3]

  • 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

A preferred stock, also known as a preferred share or simply a preferred, is a share of stock carrying additional rights above and beyond those conferred by common stock. ...

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. Year 2004 (MMIV) was a leap year starting on Thursday of the Gregorian calendar. ... Creative accounting and earnings management are euphemisms referring to accounting practices that may or may not follow the letter of the rules of standard accounting practices but certainly deviate from the spirit of those rules. ...


New Rules for Purchasing Sub-Prime Loans in the Secondary Market

Freddie Mac announced on February 27, 2007 that they will buy subprime adjustable rate mortgages only if the borrowers qualify for the maximum rate of the loan, not just the initial low introductory (known as teaser) rate. is the 58th day of the year in the Gregorian calendar. ... Year 2007 (MMVII) is the current year, a common year starting on Monday of the Gregorian calendar and the AD/CE era. ... Subprime (also sub-prime, B-Paper, B-tier, non-prime, near-prime, special finance, second chance lending) describes a specific lending market sector. ... Introduction A mortgage is a device used to create a lien on real estate by contract. ...


Awards

Freddie Mac was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine. Year 2004 (MMIV) was a leap year starting on Thursday of the Gregorian calendar. ...


Freddie Mac was ranked number 50 in Fortune 500's 2007 rankings.


See also

Derivatives traders at the Chicago Board of Trade. ... The government sponsored enterprises (GSEs) are a group of financial services corporations created by the United States Congress. ... The controversy in relation to the United States mortgage government sponsored enterprises (GSEs) was triggered by accounting scandals, which urged the US government to consider tightening the control over them. ... Securitization is a financing process in which a corporate entity moves assets to an ostensibly bankruptcy-remote vehicle to obtain lower interest rates from potential lenders--because the assets cannot be seized in a bankruptcy proceeding, the risk is less for lenders and they are willing to offer a lower...

Companies

The United States Federal Government created the Federal National Mortgage Association (FNMA) (NYSE: FNM), commonly known as Fannie Mae, in 1938 to establish a secondary market for mortgages insured by the Federal Housing Administration (FHA). ... Farmer Mac or the Federal Agricultural Mortgage Corporation (NYSE: AGM) is a stockholder-owned, publicly-traded company that was chartered by the United States federal government in 1988 to serve as a secondary market in agricultural loans such as mortgages for agricultural real estate and rural housing. ... The Government National Mortgage Association (GNMA, also known as Ginnie Mae) was created by the United States Federal Government through a 1968 partition of the Federal National Mortgage Association. ... SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, (formerly named the Student Loan Marketing Association) is the largest provider of educational loans in the United States. ...

External links

  • Freddie Mac Home Page
  • Yahoo! - Freddie Mac Company Profile
  • [4] - The Freddie Mac stock chart

  Results from FactBites:
 
Federal Home Loan Mortgage Corporation - Wikipedia, the free encyclopedia (265 words)
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.
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.
  More results at FactBites »

 
 

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