Freddie Mac

On July 24, 1970, Public Law 91-351, the Emergency Home Finance Act of 1970, was enacted. Its Title III, the Federal Home Loan Mortgage Corporation Act, created the Federal Home Loan Mortgage Corporation, placed “under the direction of a Board of Directors composed of the members of the Federal Home Loan Bank Board.” The directors served without additional pay, and the chairman of the Federal Home Loan Bank Board also chaired the corporation’s board. Its stock was nonvoting common stock to be issued only to the Federal Home Loan Banks, whose subscriptions were capped at a cumulative $100 million.⁠[1]

Congress set up the company to trade conventional mortgages for savings and loan institutions; at the time it was a wholly owned subsidiary of the Federal Home Loan Bank System.⁠[2]

In 1971 the company introduced its first conventional mortgage security, the Mortgage Participation Certificate (PC).⁠[3]

In 1984 the company distributed 15 million shares of participating, nonvoting preferred stock to member savings institutions, and its home financing passed $100 billion that year. In 1989 the participating preferred stock was split and converted into common shares, and the stock was listed on the New York Stock Exchange that year; the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) gave the company a new governing structure.⁠[3]

FIRREA in 1989 rechartered the company so that its shares could trade on the New York Stock Exchange.⁠[2]

The Federal Home Loan Mortgage Corporation, long nicknamed “Freddie Mac,” officially became Freddie Mac in 1997. An agreement reached in 2002 required Fannie Mae and Freddie Mac to register their stock with the U.S. Securities and Exchange Commission (SEC) for the first time.⁠[3]

In 2003 Freddie Mac dismissed its president and chief operating officer, David Glenn, while chairman and chief executive Leland Brendsel and executive vice president and chief financial officer Vaughn Clarke retired; Gregory Parseghian became chief executive. On November 21, 2003, the company announced the results of its restatement of 2000–2002: net income had been understated by a cumulative total of about $5 billion, $4.4 billion of it in 2000–2002 and $0.6 billion in earlier periods. Restated net income was $3.7 billion for 2000, $3.2 billion for 2001 and $10.1 billion for 2002, against originally published figures of $2.5 billion, $4.1 billion and $5.7 billion. Chairman Shaun O’Malley called the restatement “a significant step in Freddie Mac’s progress toward achieving accurate and timely financial reporting and controls.” The regulator, OFHEO, directed the company to replace Parseghian after learning that he had been “directly involved” in the questionable accounting practices.⁠[4]

On December 10, 2003, the Office of Federal Housing Enterprise Oversight (OFHEO) released a special examination report and entered into a consent order with Freddie Mac, under which the company agreed to pay a $125 million civil money penalty, which OFHEO called the largest civil money penalty imposed by a safety and soundness regulator. The report found that in pursuit of steady earnings growth Freddie Mac “disregarded accounting rules, internal controls, disclosure standards, and ultimately, the public trust,” that senior executives’ incentive compensation plans contributed to the improper practices, that “Weaknesses existed in every aspect of Freddie Mac’s accounting process,” and that the board had failed to provide adequate oversight. Corrective actions ordered or recommended included separating the roles of chief executive and chairman, tying employee incentives to long-term goals, and requiring the company to hold a capital surplus; OFHEO also froze compensation packages, removed the chief executive and general counsel, imposed a civil penalty on the former vice chairman, and began proceedings to terminate the former chief executive and chief financial officer for cause. OFHEO Director Armando Falcon, Jr. said, “A government sponsored enterprise like Freddie Mac lives on a public trust that should never be violated.”⁠[5]

On September 27, 2007, the SEC sued Freddie Mac and four former executives in the U.S. District Court for the District of Columbia, alleging that the company engaged in improper earnings management from at least the second quarter of 1998 through the third quarter of 2002 and misreported net income in 2000, 2001 and 2002 by 30.5%, 23.9% and 42.9%. The alleged conduct included transactions to offset the effects of the SFAS 133 accounting standard, an improper change to the valuation of its swaptions portfolio at year-end 2000, misuse of derivatives to shift earnings between periods and misuse of an SFAS 91 reserve; the SEC attributed it to a culture that emphasized steady earnings, summed up as “Steady Freddie.” Freddie Mac, “without admitting or denying the allegations,” agreed to pay a $50 million civil penalty, expected to go to injured investors through a Fair Fund. Former president David W. Glenn, former chief financial officer Vaughn A. Clarke and former senior vice president Nazir G. Dossani also settled without admitting or denying the allegations, paying penalties of $250,000, $125,000 and $75,000 respectively plus disgorgement; former senior vice president Robert C. Dean consented to an SEC cease-and-desist order in a separate proceeding and paid a $65,000 penalty.⁠[6]

On November 6, 2007, OFHEO issued a consent order against former chairman and chief executive Leland C. Brendsel: he was to pay $2.5 million to the U.S. government, return $10.5 million in salary and bonuses to Freddie Mac, waive claims to additional compensation valued at more than $3.4 million, and not be employed by Freddie Mac again without OFHEO’s permission; the money returned was to fund programs helping distressed homeowners keep their homes, subject to OFHEO approval. Brendsel consented to the order in settlement of charges alleging that he created a corporate culture that allowed improper earnings management and failed to ensure adequate internal controls. David Glenn and Vaughn Clarke had each entered consent orders with OFHEO carrying $125,000 civil money penalties.⁠[7]

On July 30, 2008, the Housing and Economic Recovery Act of 2008 (HERA) was enacted. Its Division A, the Federal Housing Finance Regulatory Reform Act of 2008, established the Federal Housing Finance Agency (FHFA) as “an independent agency of the Federal Government.”⁠[8]

HERA amended the 1992 Safety and Soundness Act and authorized FHFA, as conservator, to act to restore the Enterprises to a sound and solvent condition and preserve their assets.⁠[9]

On September 6, 2008, with the consent of both companies’ boards, the FHFA director placed Fannie Mae and Freddie Mac into conservatorship.⁠[9]

At a news conference on September 7, FHFA Director James B. Lockhart said that, given their capital levels, market conditions, financial condition and funding difficulties, “the companies cannot continue to operate safely and soundly.” FHFA assumed the powers of the boards and management; the chief executives left, David Moffett became chief executive of Freddie Mac, and the new chief executives were to be paid significantly less than their predecessors. Common and preferred dividends were eliminated, which FHFA expected to conserve more than $2 billion of capital a year; the common and all preferred stock remained outstanding, and payments on subordinated debt continued.⁠[10]

The U.S. Treasury provided support through Senior Preferred Stock Purchase Agreements (PSPAs): each company immediately issued $1 billion of senior preferred stock to Treasury, along with warrants to buy 79.9% of its common stock at a nominal price. Treasury’s initial funding commitment was capped at $100 billion per company, and the senior preferred stock paid a 10% annual dividend in quarterly installments.⁠[2]

In May 2009 Treasury raised its funding commitment to $200 billion per company; in December 2009 the cap was changed to a formula, which became fixed when it expired on December 31, 2012, leaving Freddie Mac with a cumulative cap of $211.8 billion.⁠[2]

On June 16, 2010, FHFA directed Fannie Mae and Freddie Mac to delist their common and preferred stock from the New York Stock Exchange. Fannie Mae’s stock had closed below the required $1 average price for the previous thirty trading days, and Freddie Mac’s was close to that threshold, so FHFA decided both should begin an orderly delisting; afterward the shares were expected to be quoted on the Over-the-Counter Bulletin Board. Acting Director Edward J. DeMarco said, “A voluntary delisting at this time simply makes sense.”⁠[11]

On August 17, 2012, Treasury and FHFA amended the purchase agreements: each company kept a net worth buffer of $3 billion, reduced by $600 million a year until it reached zero in 2018, and paid everything above it to Treasury in what became known as a “profit sweep”; each company’s mortgage portfolio was capped at $250 billion. A letter of December 21, 2017, restored the capital reserves to $3 billion each, and on September 30, 2019, Treasury modified the agreements again, allowing Freddie Mac to accumulate $20 billion of capital and Fannie Mae $25 billion.⁠[2]

By the end of 2018 Freddie Mac had paid $117 billion in dividends to Treasury and had drawn $71.7 billion from it; under the original 10% dividend it would have owed about $67 billion. After the second quarter of 2012 the companies drew on Treasury only in the fourth quarter of 2017. Shareholders sued the federal government over the amendments.⁠[2]

On July 24, 2013, Freddie Mac priced a $500 million offering of Structured Agency Credit Risk (STACR) Debt Notes, Series 2013-DN1, upsized from an initial $400 million. The notes referenced a pool of more than 96,000 residential mortgages with a balance of $22.5 billion and were the first in a series of such offerings, intended to reduce the company’s credit exposure and taxpayer risk by bringing more private capital into the mortgage market. Chief executive Donald H. Layton said, “This debt issuance is an important step forward in reducing our exposure to residential credit risk.”⁠[12]

Since 2012 FHFA has directed the companies to transfer part of their expected and unexpected credit risk to the private sector through bonds (Fannie Mae’s CAS and Freddie Mac’s STACR) and insurance or guarantee arrangements, while retaining catastrophic risk. Freddie Mac’s website records that its single-family credit risk transfer reached $1 trillion in June 2018, about five years after it began.⁠[2][13]

Common Securitization Solutions (CSS), jointly owned by the two companies, standardizes the issuance and administration of their mortgage-backed securities, which must pool loans with similar risk characteristics into a single product, the “uniform mortgage-backed security” (UMBS); UMBS issuance began on June 3, 2019. Freddie Mac’s website says the UMBS merged the Freddie Mac and Fannie Mae TBA MBS markets into a single $4 trillion market.⁠[2][13]

Freddie Mac marked its 50th anniversary in July 2020. The company records that it had provided $13.3 trillion in single-family loan funding since 1970 and $917.1 billion in multifamily loan funding since 1993.⁠[13]

On November 18, 2020, FHFA issued a final capital rule for the two companies, the Enterprise Regulatory Capital Framework (ERCF), fulfilling HERA’s mandate to set risk-based capital requirements. It required each company to maintain tier 1 capital above 4.0%, with capital distributions and discretionary bonuses restricted below that level; compared with the proposal, it increased capital relief for credit risk transfers, reduced requirements for single-family loans in COVID-19 forbearance and raised the risk-weight floor for single-family and multifamily mortgage exposures to 20%. FHFA Director Mark Calabria called the rule “another milestone necessary for responsibly ending the conservatorships.”⁠[14]

On January 14, 2021, FHFA and Treasury amended the purchase agreements to let Fannie Mae and Freddie Mac continue retaining earnings until they met the requirements of the 2020 capital rule. Treasury agreed that the companies could raise private capital and exit conservatorship once certain conditions were met, and committed to restructure its investment to facilitate equity offerings. Calabria said, “Retained earnings alone are insufficient to adequately capitalize the Enterprises.”⁠[15]

On June 23, 2021, the U.S. Supreme Court decided Collins v. Yellen. It unanimously rejected the shareholders’ statutory challenge to the net worth sweep, with Justice Samuel Alito writing for the majority that HERA’s bar on court interference was “fatal to the shareholders’ statutory claim.” By 7–2 the Court held that FHFA’s structure was “at least in part unconstitutional” because the limits on removing its director infringed on presidential control; it did not order the dividends returned but sent the case back for lower courts to decide whether the shareholders were entitled to any relief.⁠[16]

In March 2025 FHFA Director Bill Pulte appointed himself chairman of the boards of Freddie Mac and Fannie Mae, removing 14 board members and adding seven new ones. Freddie Mac chief executive Diana Reid was fired on March 20, and on March 21 the company’s president, Mike Hutchins, was named interim chief executive.⁠[17]

On May 21, 2025, Donald Trump wrote on Truth Social that he was giving “very serious consideration” to taking Fannie Mae and Freddie Mac public and would decide in the “near future.” He wrote, “Fannie Mae and Freddie Mac are doing very well, throwing off a lot of CASH, and the time would seem to be right,” and said he would consult Treasury Secretary Scott BessentScott BessentScott Bessent is an American investor and government official who became the 79th U.S. Secretary of the Treasury in January 2025. He spent much of his career at Soros Fund Management, where he ran the London office and later served as chief investment officer, and in 2015 he founded the macro hedge fund Key Square Group.Open the full entry, Commerce Secretary Howard Lutnick and Pulte.⁠[18]

On December 16, 2025, Freddie Mac announced that its board had selected Kenny M. Smith as chief executive, effective December 17, and that he would also join the board; Michael Hutchins, who had served as interim chief executive, continued as president. Smith had about four decades of experience advising financial services firms on strategy, operations, risk management and governance, including 27 years at Deloitte Consulting LLP, five of them as vice chairman and U.S. financial services industry leader, and served as global lead client service partner for Wells FargoWells FargoWells Fargo & Company is an American bank whose employees opened millions of unauthorized accounts, leading to regulatory penalties and a $1.95 trillion asset cap from the Federal Reserve that was lifted in June 2025.Open the full entry from 2008 to 2019. He holds a bachelor of business administration from Texas Tech University and is a certified public accountant.⁠[19]

On Thursday, January 8, 2026, Trump said in a social media post that Fannie Mae and Freddie Mac would buy up to $200 billion of mortgage-backed securities for their own portfolios, to raise demand and push mortgage rates down; Pulte, who also chaired both companies’ boards, responded online that FHFA was “on it.” Shortly after the announcement the spread between mortgage bond yields and Treasuries narrowed by about 10 basis points.⁠[20]

In early June 2026 Trump said at an event that Freddie Mac and Fannie Mae were worth a combined $1 trillion, briefly lifting both stocks; KBW analyst Bose George stood by his estimate of a “combined fair value in the $200 billion to $250 billion range.” Both stocks were down about 30% for the year, and the government held warrants for about 80% of their common stock. During the same period Trump named Pulte acting director of national intelligence, while Pulte continued to lead FHFA.⁠[21]

On July 24, 2026, the U.S. Court of Appeals for the D.C. Circuit affirmed a district court judgment holding that FHFA had violated the implied covenant of good faith and fair dealing owed to shareholders of Fannie Mae and Freddie Mac. A jury had awarded $612.4 million, and the district court raised the final judgment to $812 million with prejudgment interest.⁠[22]

On October 29, 2026, Freddie Mac announced third-quarter net income of $3.2 billion, up 17% from a year earlier, and net revenues of $6.8 billion, up 19%. At September 30 its net worth was $81 billion and its total mortgage portfolio $3.7 trillion, including $3.2 trillion single-family and $510 billion multifamily; during the quarter it provided $114 billion of liquidity to the market and financed 420,000 households, comprising 286,000 mortgages and 134,000 rental units. Chief executive Kenny Smith said, “Freddie Mac’s team has made home possible for millions of families across the country.”⁠[23]

At September 30, 2026, the liquidation preference of Treasury’s senior preferred stock was $150.4 billion, rising to $153.6 billion on December 31, 2026, and $140.2 billion of funding remained available under the purchase agreement. The company had paid Treasury cumulative dividends of $119.68 billion and drawn a cumulative $71.648 billion; it paid no senior preferred dividend in September 2026 because it had not yet built the capital required under the Enterprise Regulatory Capital Framework. Its stock is quoted on the OTCQB under the symbol FMCC.⁠[23]

On Sunday, November 1, 2026, at a campaign rally at an airport in Salina, Kansas, Trump announced: “Today, I’m also announcing that Fannie Mae and Freddie Mac will be investing $4.3 billion in Kansas mortgages next year,” saying it would “help 15,000 Kansas homebuyers achieve their American dream.” He thanked the companies’ chairman, Bill Pulte, for doing a “fantastic job” and said it meant “a lot of money coming to Kansas.”⁠[24][25]

The rally took place at Salina Regional Airport and was Trump’s 30th rally in 32 days ahead of the midterm elections.⁠[26]

Freddie Mac describes its mission as to “provide liquidity, stability and affordability to the U.S. housing market in all economic environments.” It buys single-family and multifamily mortgages from lenders in the secondary market, and lenders use the proceeds to make loans to other qualified borrowers; the company does “not originate mortgage loans or lend money directly to mortgage borrowers.” It usually packages the loans it buys into securities sold in global capital markets, shifting interest-rate and liquidity risk to third-party investors. It has three divisions, Single-Family, Multifamily and Capital Markets, and its Duty to Serve work adds liquidity for rural housing, manufactured housing and affordable housing preservation. In April 2026 it became the first government-sponsored enterprise to take loans from acquisition to securitization using VantageScore 4.0.⁠[13]

Freddie Mac is a government-sponsored enterprise (GSE) chartered by Congress in 1970 and has operated in conservatorship with FHFA as conservator since September 2008; the company states that it is “not managed to maximize stockholder returns” and that the conservatorship has no specified termination date. In 2025 it earned net income of $10.7 billion on net revenues of $23.3 billion, and at December 31, 2025, its net worth was $70.4 billion and its mortgage portfolio $3.7 trillion. At January 31, 2026, it had 7,334 full-time and 21 part-time employees, and its headquarters is in McLean, Virginia.⁠[27]