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 Freddie's guarantee that the principle of the underlying loan will be paid back according to the loan's payment schedule. 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.
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 and bonuses than actually managing risk.
Awards
Freddie Mac was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine.
FreddieMac does not contest, but does not concede, that it violated the Act by using corporate resources to produce campaign fundraising events or collect and transmit contributions from corporate executives to federal candidates.
However, FreddieMac admits it violated the Act by contributing $150,000 to the RGA in October 2002, a contribution that FreddieMac contends was intended for the party building fund.
Based on FreddieMac’s payment of a civil penalty of $3.8 million and agreement to cease and desist from violating the law, the Commission has decided, in exercise of its prosecutorial discretion, to send admonishment letters and take no further action as to former FreddieMac Chairman and CEO Leland Brendsel, Mr.
FreddieMac is a stockholder owned corporation chartered by Congress in 1970 to keep money flowing to mortgage lenders, such as commercial banks, mortgage bankers, savings institutions and credit unions, in support of homeownership and rental housing.
FreddieMac is not responsible for the decisions made by its lenders.
FreddieMac is owned by its shareholders and, like other corporations, is accountable to its shareholders and a board of directors.
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