Freddie Mac History: Founding, Growth & Key Milestones

The origins of Freddie Mac trace to the late 1960s during a period of acute credit tightening in American housing. At the time, Fannie Mae primarily purchased mortgages backed by commercial banks, leaving regional savings and loan associations (S&Ls) and thrifts without an organized secondary market to sell their conventional home mortgages. In response to intense lobbying by thrift institutions, Congress passed Title II of the Emergency Home Finance Act of 1970, signed into law by President Richard Nixon, creating the Federal Home Loan Mortgage Corporation (Freddie Mac). In 1971, Freddie Mac made financial history by issuing the world's very first conventional mortgage pass-through security—the Mortgage Participation Certificate (PC)—which allowed institutional investors to buy bundled home mortgages with guaranteed monthly interest and principal payments. In 1983, Freddie Mac pioneered the Collateralized Mortgage Obligation (CMO), slicing mortgage cash flows into maturity tranches to attract life insurers and pension funds. In 1989, Congress reorganized Freddie Mac into a publicly traded, shareholder-owned GSE with a board of directors identical in structure to Fannie Mae. In September 2008, after severe losses on Alt-A and interest-only mortgages threatened solvency during the global financial crisis, the FHFA placed Freddie Mac into federal conservatorship under a Senior Preferred Stock Purchase Agreement with the US Treasury. Under conservatorship, Freddie Mac overhauled underwriting standards, phased out toxic products, and built the modern $8+ trillion Uniform MBS market alongside Fannie Mae.