WASHINGTON–Freddie Mac has now been in government conservatorship for seven years, even though it has returned to profitability. With its CEO observing that no “big, bang bill is coming to change that” in Congress, the company has been working on considerably improving its service while further reducing risk to taxpayers.
Don Layton told NAFCU’s Congressional Caucus that the company is focused on three areas:
- Customers. “We are competing to earn your business in ways differently than we have in the past.”
- Meeting the needs of U.S. taxpayers.
- Modernization of the entire system of housing and finance.
“We have left behind the (government-sponsored enterprise) duopoly mindset where we operated like you needed us more than we needed you,” said Layton. “We have lots of competition now. We now focus on the entire range of lenders in order to fit our mission.”
Layton said consumer satisfaction surveys show how dramatic the improvements have been. In 2013, 43% of borrowers said they were satisfied; by 2014 that had risen to 68%, and now it stands at 78%. “Our attitude now is to be partners with our customers, which is very different form the take it or leave it attitude of the past.”
Layton said that in the past virtually 100% of the risks the company guaranteed was on taxpayers—hence the conservatorship during the financial crisis—but it’s goal now is to move at last 50% of the risk to private capital.
He said Freddie Mac is especially focused on reducing the riskiest portion of its portfolio and is moving closer to completely elimination its most risky assets.
Layton noted that since 2008 the company has drawn $71 billion in assistance from taxpayers, but it has paid $96 billion back to the federal Treasury. None of those funds, however, have counted toward paying down that $71 billion.
Next up for Freddie Mac, said Layton: moving to innovating improvements, including single security, a Common Securitization Platform, a uniform mortgage data program, and the launch of its HomePossible Advantage product.
“ A lot of this is unexciting plumbing, but it makes a big difference,” he said. “This will allow the industry to be more automated and computerized to be more efficient, which we could use. We’re not done. We’re all about getting better. Better customer service. Better products. Better protection for the taxpayers. And a better housing finance system.”