Key Strategies of Freddie Mac

Freddie Mac

According to a recent Freddie Mac poll, young and generation z real estate professionals (REPs) desire and require chances for peer networking. This has become even more crucial during the COVID-19 epidemic as these agents struggle to connect with prospective clients and first-time homebuyers, network with industry peers, and utilize educational opportunities and tools to get a competitive advantage and advance their professional performance.

Low mortgage rates and a shortage of availability drove up house prices in the hot and frenetic mortgage market of 2021, leading to price hikes, repeated offers, and overbidding. The company is trying its best to reduce the hike in price in the mortgage market, thereby allowing room for new customers and also ensure the retaining of old clients.

In this article, I’ll be exposing the strategic plans that Freddie Mac embarks on to attract new customers and remain competitive in the secondary mortgage industry. Without any further time wasting discussion, let’s dive in.

Our Mission is our Priority

According the CEO of the company, the company plans to focus more on its mission. The CEO emphasized that he has had a significant amount of experience in the housing finance sector prior to joining Freddie Mac and he is aware of Freddie Mac’s long-standing commitment to the housing market’s need for liquidity, reliability, and affordability. In addition to that, he firmly believes in that purpose, especially the value of high-quality, reasonably priced accommodation for families, neighborhoods, and communities. This belief has only been strengthened by all he has seen and heard thus far during his time as CEO.

He further mentioned that, the company’s goal, which it analyzes broadly to address the nation’s larger housing demands in both prosperous and trying times, will guide all of its strategic initiatives in 2022 and beyond. Among these strategic objectives are:

-Encouraging housing equity

-Assisting its customers in a much better way by collaborating with lenders of all sorts

-Incorporating social, economic, and governance practices into the company’s operations and business activities.

-Preserving homeownership for struggling families throughout the economic cycle and stabilizing the housing market.

-Collaborating with a variety of housing market players to encourage increased availability and supply of affordable and sustainable houses across the nation.

-Improving the capital and mortgage markets’ liquidity.

Freddie Mac must maintain its commitment to excellence in risk management, produce outcomes, and expand its world-class staff in order to fulfill its goal and satisfy these priorities. As the company looks for new and improved ways to accomplish its goals, it must also commit to routinely reviewing the business and risk environments in which it currently operate. These are the key strategies that ensures the guidance of the company in achieving its goal of Making Home Possible each and every day.

Develop talent for the future

The company has made certain investments on growing a lot of young, fresh minds that can carry on the legacy of the company. The CEO said, it is an honor for him to manage such a capable and dedicated group. We must make sure we are cultivating our next generation of leaders if we are to support the business and the industry in the future. Because of this, we are also concentrating on developing a culture in which brilliant people from diverse backgrounds who behave ethically and can prosper.

Provide Results

Freddie Mac must continue to produce strong financial performance, raise capital, and achieve the company’s goals in order to support the market and fulfill its mission.

The CEO emphasized that, although the company has performed well lately, there is still work to be done. To further our purpose, we must continue to offer original solutions. To raise production and reduce costs throughout the housing finance industry, we must improve organizational efficiency at all levels. In order to serve borrowers, renters, investors, and lenders, we must also keep collaborating with our partners and other stakeholders.

Use of excellent risk management techniques.

Freddie Mac as a company puts a lot of effort into managing risks effectively. The more generally the company supports its mission throughout the economic cycle and in especially during times of crisis, the better it will be at maintaining its own safety and soundness. On the company’s website, it is highlighted that the company can better safeguard the organization’s security and soundness and put itself in a better position to make the wider housing finance system safer and more effective by consistently enhancing our operations and risk management.

Creation of Housing Solution Team

Effective housing solutions shouldn’t adopt a one-size-fits-all strategy, according to Freddie Mac. In order to lower barriers to homeownership and offer solutions to some of the toughest housing challenges facing the country, Freddie Mac established its Housing Solutions team in 2020 as part of its mission to provide liquidity, stability, affordability, and equality to the housing market. The team’s main concerns are the difficulty in obtaining credit, housing disparities, the development and maintenance of an affordable housing supply, and the improvement of homeownership education.

To accomplish this, they use a data-driven strategy to envision, design, and test solutions that are specifically matched to the strategic markets where they intend to deploy them. The capacity to scale impact to additional markets will arise from key implementation-related learnings and the identification of achievements.

The Housing Solutions team developed the Freddie Mac Develop the Developer program with the goal of empowering local female and BIPOC developers who have a strong desire to develop or revive underserved local markets. The program offers extensive technical coaching, mentoring programs, resources, and connections.

It’s just one way that Freddie Mac is gathering and working with the sector to create the home of the future.

Release From Conservatorship

A strategy plan for freeing Fannie and Freddie from conservatorship was presented by FHFA in 2014. The strategy has three main objectives:

-Allowing the housing finance markets to remain robust, liquid, and effective by avoiding foreclosures. In addition to that, it also wants to ensure that mortgage credit continues to flow in a safe and sound manner.

-Encouraging greater private investments into the mortgage sector to lower taxpayer risk. This objective would lessen Freddie and Fannie’s influence over mortgages.

-Creating a new infrastructure for securitizing mortgages on single-family homes.

The goal is to develop a system that maintains mortgage accessibility and affordability while doing away with the implicit guarantee that exacerbated the financial crisis of 2008. Each year, the FHFA releases a scorecard to track progress made toward these objectives. Congress must, however, also determine whether to release Fannie and Freddie from conservatorship.

Another advantage of releasing Freddie Mac from conservatorship is the ability of investors to trades the shares of the company on a stock exchange, as this would guarantee the value elevation of the stock. As of today, Freddie Mac and Fannie Mae shares are traded over the counter (OTC), which means you cannot purchase them on a significant stock exchange platform. As of September 2021, the value of each share of FNMA and FMCC is less than a dollar.

Conclusion

Freddie Mac has produced a lot of really impressive accomplishments. Despite the worldwide epidemic and unusual housing supply issues, it was able to construct a home for 5 million homeowners and renters in 2021. In actuality, the company gave the mortgage market $1.3 trillion in liquidity last year.

The company claims it is capable of doing even more. For instance, increasing opportunities for sustainable homeownership and rental housing is a key focus area for 2022, and it will soon present a thorough Equitable Housing Finance Plan.