Our Business

We connect Main Street – the residential mortgage market – to Wall Street – dealers and investors – through our mortgage purchase, credit guarantee and portfolio investment activities.

Our customers are predominately lenders in the primary mortgage market. Our activity in the secondary mortgage market supports a continuous flow of funds to the primary market, which leads to consumer benefits in the form of a steady flow of low-cost mortgage funding. This flow of funds helps moderate cyclical swings in the housing market, redistributes the flow of mortgage funds regionally throughout the U.S. and provides for the availability of mortgage funds at all times. In addition, the supply of cash made available to lenders through this process lowers mortgage rates, making homeownership affordable for more families and individuals.

Lending institutions extend mortgage loans directly to their customers who wish to purchase or refinance a home. Often, lenders look to Freddie Mac to purchase those mortgages from them, replenishing the supply of money for lending. One of the means by which we fund purchases of mortgages loans is through the use of securitization-based financing. We issue a mortgage-related security that represents an undivided interest in the mortgage loans we purchase. We then provide a guarantee of the payment of principal and interest on all securities. Our customers may choose to hold these securities in their portfolios or sell them to other investors.

Freddie Mac also purchases mortgage loans and mortgage-related securities and holds them in our Retained Portfolio for investment purposes. We finance these purchases by issuing short-, medium-, and long-term debt and subordinated debt and equity securities. Our purchases replenish the sources of capital available for mortgage lending to consumers.

Currently we buy one mortgage every seven seconds to help finance one in six American homes. We also buy mortgages for multifamily buildings that offer rental housing to families, and in this way allow renters to have access to affordable homes as well.

Here's how it all works for residential single-family mortgages:

• A homeowner sends the monthly payment to the lender or a mortgage servicer that manages the payments.
• The servicer keeps a small fee for managing the borrowers' payments and sends the rest of the monthly payment to Freddie Mac.
• Freddie Mac passes through the remainder of the mortgage payment to investors who hold our mortgage securities.

Because Freddie Mac exists, millions of Americans benefit from lower mortgage interest rates, readily available home mortgage credit, a wide choice of mortgage products and reduced loan origination costs. Millions of families are also able to rent safe and affordable homes.

To achieve our mission – to lower costs and increase access to quality housing for more of America's families – we must be the best.

This means we need the best accounting practices, controls, and financial disclosures. Transparent and accurate financial information is the cornerstone of our commitment to support and expand America's housing system. Federal oversight helps us play our vital role.

As part of our financial management we build long-term value for our shareholders and meet our regulators' capital requirements—to ensure that we have enough cash on hand to sustain our nation's mortgage market through economic hard times.