Perspectives
July 01, 2019

Our Next Chapter

David Brickman
By
David Brickman, CEO

When I first walked in the doors of Freddie Mac over 20 years ago it was to lead a few targeted consulting engagements and try to help the firm I was working for grow its business. Back then I could not have imagined how profound of an impact this company, its people and its mission would have on me. And ultimately, instead of selling Freddie Mac on my old firm, I was sold on Freddie Mac. That is why today, it is with great pride, humility and a firm appreciation for the hard work and dedication of all our employees that I take the helm as Chief Executive Officer.

It’s been nearly 50 years since Freddie Mac first opened its doors and during those years we have made home possible more than 80 million times. We have witnessed major changes both in our markets and our structure, but throughout it all our mission has been at the heart of our work. It’s a mission that I know matters to every employee at the company. What we do is important; helping to provide safe, decent, affordable housing is critical for building and sustaining strong families and communities. Our mission is part of our DNA as a company and it is deeply personal to me.

A Transformed Company

I have witnessed significant change at Freddie Mac over the past 20 years, and many of the most positive have occurred during the last 11 years of conservatorship. So while we are not the same company that we were when I started, certain aspects of who we are and what we stand for remain. In addition to our commitment to the mission, we have retained our focus on innovation, adaption and technological advancement for the company and the housing industry. And there is no greater example of our constant evolution than the last decade of progress.

We’ve said a great deal about the series of reforms that Freddie Mac implemented following the financial crisis, which spurred the transformation of the company and the housing finance system as a whole. Among those reforms, we moved from a “buy-and-hold” to a “distribute-and-protect” company by pioneering credit risk transfer and new, innovative forms of securitization. We invested heavily in technology to make the mortgage process easier, faster and less expensive. And we leveled the playing field for lenders of all sizes, which helps us support more lenders in providing families with a quality home. We have also become a more market-oriented, customer-centric company that is able and eager to compete. By any measure, we are today a well-run financial institution that is innovative, competitive and mission-driven.

Continuing our Progress

As CEO of Freddie Mac, my top priority is to capitalize on our transformation and bring us into the next chapter — ready and able to meet a rising number of new challenges in a rapidly changing environment. And to get us there, I will focus on three key areas:

First, continue to establish Freddie Mac as the housing industry leader. We will be looking to enhance the company’s leadership and leverage our research, analytics and innovation to do more to meet the needs of, and create value in, the housing market.

We will continue to pioneer advances that bring new products, processes and technology to the housing market. These will help us create more opportunities for borrowers and renters. And more importantly, it will help us envision the future and build our business in a way that furthers our role as an innovator and leader.

Last month’s successful launch of the Uniform Mortgage-Backed Security – a collaborative effort that merged Freddie Mac’s and Fannie Mae’s To-Be-Announced markets into one $5 trillion market – is one of the most significant examples of this. Truly game-changing, it standardizes securities and brings greater liquidity to the market, while lowering costs for borrowers, taxpayers and investors.

We will also explore additional avenues of credit risk transfer to further reduce our risk exposure, make the housing finance system more resilient and protect the U.S. taxpayer. Leading the development of the K-Deal was a personal milestone for me, but, more importantly, it fundamentally changed the way the housing market is funded. Since its inception just 10 years ago, we’ve grown our risk transfer offerings dramatically, introducing nearly 20 products that have transferred a portion of risk on over $1.6 trillion in underlying single-family and multifamily mortgages.

And importantly, we will continue our digital transformation to ensure doing business with us is as fast and efficient as possible.

Second, redouble our efforts to embrace our mission.  Our mission remains paramount and we are striving to find new ways to tackle housing affordability including, but well beyond, access to credit. As an industry, we must be more innovative to help lower the cost of construction, preserve existing housing and address the shortage of housing supply.

For our part, we will continue to focus on developing offerings that help put borrowers and renters in homes they can afford. We’ve already brought to market many key products to meet this need. But we must responsibly expand these programs and look for new opportunities to make a lasting impact, particularly in some of the most challenged and underserved housing markets in the country.

Third, prepare to move beyond conservatorship. Given the current conversation in Washington and the expected release of the Administration’s Housing Finance Reform Plan, we must prepare for our future and be ready to follow the path set by the plan and by FHFA’s new Director, Mark Calabria. Over the last several years our company has consistently performed well with stable earnings, strong credit quality and a growing credit risk transfer program that is key to our business model. As we embark on our next chapter, we are eager and ready for whatever framework policymakers outline as a pathway out of conservatorship.

Tomorrow Starts Today

These are the building blocks for the future of Freddie Mac. By relentlessly focusing on those three principles, bringing the same adaptability and resiliency we’ve brought to every fundamental change the company has seen, and continuing to innovate to better serve our customers and the industry, we will succeed in the next chapter of our story.

I am excited to join with our employees, customers and industry partners in building that future. The opportunity has never been greater.

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