Turnaround Expert Donald Layton Keeps Freddie Mac Profitable

Freddie Mac, a government-sponsored enterprise entering its tenth year of conservatorship under the U.S. Treasury, nearly tripled its net income in the second quarter, to $4.7 billion. Excluding a large legal settlement, Freddie Mac made a profit of $1.8 billion – and reached a milestone of $1 trillion of mortgages with significant credit risk transferred.

“We clearly had a strong quarter,” said CEO Donald Layton. “This reflects the growing strength of our business model, as well as an improving quality of execution.”

The GSE is on track to post its sixth straight year of profits, in no small part to Layton coming on board in 2012, after shepherding E*TRADE Financial through the financial crisis. Before that, he spent nearly 30 years at JPMorgan Chase and its predecessors, starting as a trainee and rising to vice chairman and member of the three-person Office of the Chairman, retiring in 2004.

How is Layton helping to make Freddie Mac better for America’s lenders, taxpayers, homeowners and renters? The short answer: “transform and reform,” the CEO said on the latest earnings conference call.

Layton told Housing Wire that the team at Freddie Mac has helped turn around the “supertanker” in a number of ways. The GSE now has credit risk-sharing deals, in which it has transferred a significant portion of the credit risk on $600 billion of single-family loans and $180 billion on multi-family loans, since the two programs started in 2013 and 2009, respectively.

Freddie Mac also is beefing up its customer-service standards, boosting sales of legacy assets, pumping up its volume of apartment loan purchases and helping to keep thousands of families out of foreclosure.

“Alongside these improvements, we are more effectively delivering on our community mission each year – with new products and programs which increase access to credit for more homebuyers and which fund affordable rental housing across the nation,” Layton said. “All of us at Freddie Mac are strongly dedicated to continuing this momentum and, through it, to improving America’s housing finance system.”

At the Mortgage Bankers Association’s conference in October, Layton detailed a number of additional initiatives to boost customer service, including continually upgrading software capabilities within its Loan Advisor Suite.

“Today, we are revolutionizing our customer focus as a company,” he told the mortgage bankers. “We’re working to help you meet challenges, reduce costs, and give you greater certainty that what you sell to us stays with us. We have detailed pain points to remove so you can do business with us, so we can serve you as you wish to be served.”

Layton is No. 40 on Chief Executive and RHR International’s CEO1000 Tracker, a ranking of the top 1,000 public/private companies.


Donald Layton

Titles: CEO and Board Director

Age: 66

Year Started: 2012

Degrees: B.S. and M.S., Massachusetts Institute of Technology

Former Position: CEO, E*Trade Financial

Company Headquarters: McLean, VA

No. of Employees: 5,959

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