Freddie Mac

Few chapters in the annals of corporate welfare are as impressive as the one on Fannie Mae, the troubled mortgage concern. Oil companies rely on cut-rate government drilling leases to tilt things their way. Sports teams use stadiums built with taxpayer dollars. Big Sugar gets federal trade walls against competition. But Fannie Mae is the only Fortune 100 company that used to be a federal agency. Imagine if the Federal Reserve decided to sell stock to the public. You might get in on that action, right?

WASHINGTON - Fannie Mae and Freddie Mac, the biggest sources of U.S. home mortgage financing, pose risks of instability in financial markets that might loom larger than their benefits in expanding homeownership, U.S. Comptroller General David Walker told a Senate panel yesterday. "It is difficult for Congress, accountability organizations and the public to determine whether the benefits provided by the GSEs' activities are in the public interest and outweigh their financial risks," Walker told the Senate Banking Committee.

For an entire weekend this spring, a Baltimore advertising agency closed off Wall Street to put up a full-sized facade of a Cape Cod house, wedged between two skyscrapers. The brick cottage -- torn down after the weekend's TV spots were filmed -- came complete with a real family, as well as doors, windows, grass, a picket fence and Kitty Litter used to simulate a sidewalk.The TV commercial -- the brainchild of Trahan, Burden & Charles -- is part of a major image-building campaign for Freddie Mac, a shareholder company that buys and sells $190 billion worth of home mortgages each year.

In the time it takes to withdraw money from the bank machine, consumers can now get a mortgage.No more digging up every last statement and pay stub. No more sweating it out until settlement day. Freddie Mac, the Federal Home Loan Mortgage Corp., says the day of the automated mortgage is here.Instead of loan originators, processors and underwriters poring through documents for several weeks, computers can digest a loan application and spit back an answer in minutes. Mortgages can be approved over the phone.

The leadership of one of the nation's largest holders of home mortgages was abruptly replaced yesterday after its regulator accused the company of a string of problems including employee "misconduct" as well as weakness in controls, personnel and accounting. Freddie Mac fired its president and chief operating officer, David Glenn, after questioning the "timeliness and completeness of his cooperation and candor" with the board of directors' counsel concerning accounting errors. It also announced the retirement of its longtime chairman and chief executive, Leland C. Brendsel, and the resignation of Vaughn Clarke, the chief financial officer.

The federal regulator of Freddie Mac said yesterday that it will seek $33.9 million in fines and forfeited severance and benefits from former Chief Executive Officer Leland C. Brendsel for his role in the mortgage finance company's manipulation of earnings. The Office of Federal Housing Enterprise Oversight will seek $3.9 million from former Chief Financial Officer Vaughn Clarke, including returned compensation, penalties and restitution, the agency said in a statement. Yesterday's action by the regulator, which has been under fire for not detecting Freddie Mac's accounting errors, comes a week after it ordered the company to pay a $125 million fine for earnings manipulation.

Tapping into the enormous influence of the nation's Baptist churches in minority neighborhoods, Freddie Mac launched its first business venture with a religious group yesterday to make home mortgages for at least 150,000 low- and moderate-income families by the end of the decade.Teamed with a corporation of the National Baptist Convention of America Inc. and the National Baptist Convention USA Inc., Freddie Mac will finance mortgages for homebuyers in predominantly minority neighborhoods with low ownership rates, working with borrowers until they qualify for loans.

ONE OF THE largest providers of home mortgage money in the country is about to deploy a new, high-tech early warning tool designed to keep thousands of borrowers who have fallen behind on loan repayments out of foreclosure.Freddie Mac, the congressionally chartered owner of approximately 7 million home mortgages, has developed an electronic system that spots borrowers who are statistically most likely to end up in foreclosure.Analyzing 70 to 80 "borrower characteristics" from each loan file, the system flags high-risk consumers very early in the default cycle -- as little as 16 days after the homeowner misses a mortgage payment.

WASHINGTON -- Fannie Mae -- long known in the home mortgage trade as a softie when borrowers fall behind on payments -- is toughening up its act in 1996. No more Mr. Nice Guy. No more automatic rate cuts for borrowers facing temporary financial problems.But Fannie's chief competitor, Freddie Mac is taking the opposite tack. Traditionally a hardball player on loan delinquencies, the Federal Home Loan Mortgage Corporation wants to boost its number of "loan modifications" -- rate reductions, term extensions and other changes for people in financial distress -- by a hefty 50 percent this year.

A $5 million pledge of private financing for the renovation and sale of vacant government-owned houses in Baltimore was announced yesterday. Freddie Mac, one of the nation's largest suppliers of mortgage money, promised to finance the rehab and sale of about 100 houses that the U.S. Department of Housing and Urban Development has been unable to sell for six months or more. The houses will be bought for $1 each by St. Ambrose Housing Aid Center, which will use the Freddie Mac funds to rehab and sell them to buyers who will be able to get mortgages financed by Freddie Mac. A 31-year-old company chartered by Congress, Freddie Mac does not make loans directly.