Freddie Mac

Freddie Mac, officially the Federal Home Loan Mortgage Corporation, is a government-sponsored enterprise that keeps the U.S. housing market liquid by buying mortgages from lenders, bundling them into mortgage-backed securities, and selling those to investors. Congress created it in 1970 through the Emergency Home Finance Act to inject competition into the secondary mortgage market, which until then had been dominated by Fannie Mae. The name is a phonetic play on its acronym FHLMC, a branding move from the early days to make the agency more approachable. Its McLean, Virginia headquarters houses the team that guarantees roughly one in four home loans in America.

The 2008 financial crisis nearly broke the company. Freddie Mac had waded deep into subprime lending, and when housing prices collapsed, it needed a government rescue. On September 7, 2008, the Federal Housing Finance Agency placed it into conservatorship, wiping out common shareholders and handing control to federal regulators. The Treasury injected up to $100 billion in senior preferred stock to keep it afloat. Since then, Freddie Mac has paid billions in dividends to the Treasury, but remains in conservatorship with no clear exit date. In 2023, it posted $10.5 billion in net income, a sign of its steady post-crisis recovery, though political battles over its future continue in Washington.[edit]