The Federal Home Loan Mortgage Corporation (FHLMC), popularly known as Freddie Mac, is an important, secondary mortgage market institution located in McLean, Virginia. It was chartered by Congress in 1970 to serve the member institutions of the Federal Home Loan Bank Board System, primarily federally-insured savings and loan associations. Until January 1, 1989, it was owned by them. Today, Freddie Mac is a shareholder-owned corporation with its stock traded on the New York and Pacific Stock Exchanges. However, five members of Freddie Mac's 18-member board of directors are appointed by the President of the United States. The remaining thirteen directors are elected annually by the shareholders.

Because of its congressional charter, Freddie Mac is known as a government-sponsored enterprise (GSE) and deemed to be an agency of the U.S. Government. Therefore, all mortgages, obligations, or other securities sold by the Corporation are considered to be acceptable as security for fiduciary, trust, and public funds.

Freddie Mac's task is to increase the availability of money, which mortgage lenders, such as commercial banks, mortgage bankers, savings institutions, and credit unions, can lend for residential mortgages. It accomplishes this by purchasing investment-quality, conventional FHA, and VA, mortgages from primary lenders. FHLMC packages them as Mortgage-Backed Securities (MBS), which include a Freddie Mac guarantee. It sells these securities to investors, such as insurance companies and pension funds. In this way, Freddie Mac replenishes its funds for the purchase of additional loans from the primary market. Freddie Mac is one of the nation's largest purchasers of home mortgages. It has helped to finance nearly 23 million homes, one of every six American homes.

Freddie Mac competes with Fannie Mae. These two organizations have similar charters, congressional mandates, and regulatory structures. Like Fannie Mae, Freddie Mac's charter prohibits it from originating mortgages. Freddie Mac's operations are generally confined to conventional residential mortgages of the quality, type, and class, which meet the requirements of private institutional mortgage investors. (In contrast, Ginnie Mae was created to ensure that adequate funds would be available for FHA and VA mortgage loans.) Unlike Fannie Mae, Freddie Mac guarantees only those mortgage-backed securities or mortgage-related payment securities which are backed by the mortgages, which it has purchased. Freddie Mac retains a modest volume of loans in its investment portfolio.

Most Freddie Mac mortgage purchases are financed by the sales of guaranteed mortgage securities called Mortgage Participation Certificates (PC's). The single-class Mortgage Participation Certificates (PC's) represent undivided interests in primarily conventional mortgages. Freddie Mac also sells multiclass PC's, each series representing beneficial ownership interests in specific pools of single-class PC's. Freddie Mac receives principal and interest payments from mortgage servicers, which it passes through, net of management and guarantee fees, to the security holders. It guarantees the timely payment of the interest and principal to these PC holders.

Freddie Mac has more than $11 billion in capital and reserves. Its more than $733 billion in mortgage assets are secured by homes valued at more than one trillion dollars.