Federal Home Loan Mortgage Corp. v. Superior Court

We issued an order to show cause to determine whether petitioner Federal Home Loan Mortgage Corporation (Freddie Mac) should be granted priority in its claim against the estate of TMIC Insurance Company (TMIC). We conclude Freddie Mac is not entitled to priority and accordingly deny the petition.

Statement of Facts and Proceedings Below.

Freddie Mac is a United States corporate entity created pursuant to 12 United States Code sections 1451-1459 to develop a secondary mortgage market for conventional residential loans. Freddie Mac purchases residential mortgages and resells them in the form of guaranteed mortgage securities. Freddie Mac guarantees to the security holders timely payment of the interest and the ultimate collection of the principal balance. The securities are not guaranteed or insured by the United States Government or any government agency.

Freddie Mac’s common stock is owned by the Federal Home Loan (FHL) banks. ( 12 U.S.C. § 1453 (a)(1).) Freddie Mac has also issued preferred stock which was initially distributed on a pro rata basis to the FHL bank shareholders who in turn distributed the preferred stock to their own stockholders. Trading of the…