Risk & Compliance

Freddie the Filer

After a successful debt offering, Freddie Mac registers its stock with the SEC.
Marie LeoneJuly 18, 2008

Freddie Mac and EDGAR became fast friends on Friday, when the mortgage lender voluntarily registered its common stock with the Securities and Exchange Commission for the first time.

Under SEC regulations, Freddie Mac — known officially as the Federal Home Loan Mortgage Corp. — is now required to file subsequent periodic and annual financial results with the commission. All financial reports filed by publicly held companies are available to the public via the SEC’s EDGAR database system.

Freddie Mac filed a Form 10 registration statement with the commission, and 25 shareholders filed Form 3s — the paperwork used to declare an ownership stake of 10 percent or more in a public company. The registration statement included unaudited financial statements for the quarter ended March 31, and audited financial statements for the full years 2007, 2006, and 2005.

“Becoming an SEC registrant marks an important milestone for the company and demonstrates our commitment to enhanced transparency and financial reporting,” said Freddie Mac chairman and CEO Richard Syron, who added that the registration statement does not relate to a stock offering.

However, the lender reiterated that it has made a commitment to its regulator, the Office of Federal Housing Enterprise Oversight, to raise $5.5 billion of new core capital through one or more offerings, which will include common and preferred stock. The timing, amount, and mix of securities are subject to approval by Freddie Mac’s board. When the market closed on Friday, the company was trading at $9.17 per share.

Earlier this week, Freddie Mac sold $3 billion in short-term debt through an auction process. The lender, which will use the funds for day-to-day operations, has issued $32 billion of such securities — known as reference bonds — in 2008.

Investors’ appetite for Freddie Mac securities is a testimony to the recent bailout plan orchestrated by the Treasury Department to prop up the staggering Freddie Mac and Fannie Mae. The plan, which has to be approved by Congress, does not explicitly back lenders’ debt, but it does provide for larger credit lines for the two mortgage purchasers and calls for Treasury to buy equity stakes in both companies if necessary.