Get to Know Freddie Mac Transcript
Question 1
What does Freddie Mac actually do? I've never quite understood.
Freddie Mac is an organization that was created by Congress back in 1970 to provide a continuous flow of mortgage money to America's borrowers and to America's renters. It's basically a private corporation that's shareholder owned, but it was created by Congress with a specific mission, and that is to provide liquidity, stability, and affordability to the mortgage markets.
At the cornerstone of what we do is the 30-year fixed rate mortgage. Freddie Mac enables borrowers to obtain a 30-year fixed rate mortgage; we don't do it alone, but it wouldn't be widely available without our efforts. That means that the American consumer can get a mortgage with a fixed rate – they will know that rate – for 30 years. It allows them to plan their finances all the way out. And if at any time they decide that interest rates are better, they can put that mortgage back to the bank. As long as they're making their payments, the bank can't put it back to them; the bank can't call and say, "Interest rates have gone up, we'd like to refinance your mortgage." But you can call the bank and say, "Interest rates have gone down, I'd like to refinance." That is the 30-year fixed rate mortgage, and it has enabled more and more Americans to achieve the dream of home ownership, and we're very proud of it here.
Question 2
Does Freddie Mac work directly with homebuyers, homeowners, and renters?
So a lot of people don't know what Freddie Mac does; they have an impression of Freddie Mac based on what they read in the newspaper and based on what some pundits say, but they don't know anything about us, and there's a reason for that. That's because Freddie Mac wasn't created to work with the consumer; we work with the banks that provide consumers money. We make sure that banks all over the country, and mortgage lenders all over the country, have the funds that they need to ensure that credit-worthy borrowers can borrow money to buy homes and to ensure that renters have a reasonable, affordable place to live. So we're not working with consumers, we're working with the banks and mortgage lenders that work with consumers.
Question 3
Now that taxpayers are funding Freddie Mac, what are you doing to help us recover from the housing crisis?
I've always been proud to work at Freddie Mac, but I've never been prouder than I am now while we're in conservatorship; now that might sound odd, so let me explain. Freddie Mac is doing more than ever to support the mortgage markets and to support our nation. We are helping the nation recover from this awful economic crisis. First of all, we are providing – with Fannie Mae – the lion's share of capital to the single family market – over 70% of the capital flowing to the single family market today is coming from Freddie and Fannie. We are providing the vast majority of capital to the multifamily market – over 80% of the capital flowing to the multifamily market is coming from Freddie and Fannie today. In fact, without Freddie and Fannie it's unclear whether there would be a viable multifamily market.
We are working hard to prevent foreclosures and are supporting the President's Making Home Affordable plan. We are receiving federal support, that's well known – we're not the only entity receiving federal support but we are receiving it and a lot of it. And, I'm proud of what we're doing with it because we're using it to support the single family market; to support the multifamily market; to prevent foreclosures; to stabilize neighborhoods; to help the economic recovery. We are being good stewards of that money.
Question 4
How are you helping America's struggling homeowners avoid foreclosure and stay in their homes?
Foreclosure prevention has long been a part of what Freddie Mac does, but during the economic crisis, we're trying new and innovative ways to reach borrowers and help them stay in their homes. For example, we have conducted over 500 foreclosure prevention workshops across the country to help borrowers. We also have a telephone service, where for free, counselors call homeowners who may be in trouble to help walk them through the process and take the steps they need in order to keep their homes. We also have a free door-knocking service where counselors will go to people's homes and help them gather and organize the documents they need to stay in their homes. We've opened up five help centers where people can meet in person with counselors for free to help them avoid foreclosure.
We also have a program for borrowers and for renters; if you're a borrower, and you're having trouble making your payments and you're going to lose your house, we will rent the house back to you. If you're a tenant living in a house like that, we'll rent the house to you. These are all new and different things that we've done during the housing crisis and we're not done, we'll think of more. In the mean time, if you need more information about Freddie Mac's efforts, please go to FreddieMac.com/AvoidForeclosure. The information I've given you here and a lot more information is available there.
Question 5
What is it like to work at Freddie Mac when you are under so much criticism?
I have the privilege of going out into the industry a lot with our senior executives and other Freddie Mac personnel, and talking to people – realtors, homebuilders, mortgage bankers, consumer groups. And, what I've noticed is this: you can find a lot of organizations in this country where people are extraordinarily knowledgeable about business, they have extraordinary business acumen, and you can find many organizations in this country where people care deeply about housing and care deeply about Public Policy. But you won't find many organizations, like Freddie Mac, where there's a marriage of the two. The people at Freddie Mac care deeply about housing, they care deeply about our mission, that's why they're here. But they also understand the business, they understand what the markets need, they understand what needs to happen to keep the secondary market working. And it is working around those people and the energy they brought during this economic crisis that really has made this an exciting place to work.
Question 6
What does the future hold for you?
There's a Public Policy debate going on right now about the future of the GSEs. We don't have an opinion as to what the outcome should be – but I do know this: if it's a good Public Policy debate and a good outcome, and entities are created that provide liquidity, stability, and affordability to the nation, in good times and in bad, that's an entity I want to work for.