GSE Oversight

Freddie Mac was chartered [PDF 54K ] in 1970 with a single purpose: to provide a continuous and low-cost source of capital to finance America's housing. Since its inception, it has been subject to strict regulatory oversight.

Congress further strengthened this oversight in the Federal Housing Enterprises Financial Safety and Soundness Act of 1992. That legislation created a regulatory oversight structure for Freddie Mac that addresses two functions - our housing mission and our financial safety and soundness.

The U.S. Department of Housing and Urban Development, or HUD, has oversight responsibilities over the housing mission of Freddie Mac. In addition, the GSEs are subject to affordable housing goals set by HUD. The goals are targeted to low- and moderate-income families, very low-income families and low-income families living in low-income areas, and families living in HUD-defined underserved areas.

Effective January 1, 2005, HUD established new and increasing affordable housing goal levels for the GSEs for the years 2005 through 2008. In total, Freddie Mac is required to achieve six different and increasing HUD goals and sub-goals and a higher multifamily dollar-target.

Regulation of our financial safety and soundness is vested in the Office of Federal Housing Enterprise Oversight (OFHEO). Organizationally, OFHEO is located within HUD. However, it operates independently of the Secretary of Housing and Urban Development. Among other regulations relating to safety-and-soundness, OFHEO implements, monitors, and enforces capital standards for Freddie Mac. OFHEO's regulatory capital requirements include a traditional, ratio-based minimum capital requirement and a risk-based capital requirement designed to ensure that Freddie Mac maintains sufficient capital to survive a sustained and severe financial crisis. In addition, OFHEO conducts comprehensive examinations of Freddie Mac.