I am writing to respond to the recent allegations of "bullying" made in the name of FM Watch, the coalition of subprime lenders, mortgage insurers, and megabanks seeking to thwart Freddie Mac's ongoing efforts to reduce mortgage costs for America's families.

Let me state unequivocally: Freddie Mac has not, does not, and will not do business this way.

The institutions we supposedly threatened are our customers and business partners. Freddie Mac remains committed to working with them. By working together we can make mortgage credit more available and affordable in the best interest of consumers.

Why the smear campaign? Because the institutions behind FM Watch cannot win with the facts. Their campaign seeks to prevent Freddie Mac from fulfilling our congressional mandate to promote low-cost mortgage credit for America's families.

Freddie Mac's innovation is succeeding in slashing costs from every step in the mortgage process.

Considering who is backing FM Watch, it is easy to understand why they object:

Subprime lenders that are trying to preserve an extremely costly and in many cases unfair way of doing business. It's no surprise these lenders react when Freddie Mac finances mortgages for borrowers who previously paid too much. By working with our lender customers to finance these borrowers safely and fairly, Freddie Mac is helping families reduce their costs and build a financial stake in their homes and communities. We are buying these mortgages using the toughest anti-predatory-lending standards in the industry. We invite FM Watch members to join us in taking a stand against predatory lenders.

Mortgage insurance companies that have an interest in perpetuating their inefficient, expensive products. Mortgage insurers have entered into lucrative arrangements with some large lenders that create an incentive to use high-cost mortgage insurance products, loading unnecessary expenses on low- and moderate-income borrowers. It's no surprise they object to Freddie Mac's offering lenders alternatives that reduce borrowers' monthly payments. Freddie Mac has periodically adjusted our mortgage insurance requirements to facilitate our purchase of low-down-payment loans. Only when we attempted to reduce excessive insurance requirements did they claim we were entering their business and hurting consumers. Providing lenders additional low-cost mortgage options can only benefit consumers.

Megabanks that seemingly view Freddie Mac as an obstacle to their domination of the market for consumer financial services. They would prefer that small lenders have to go through them, rather than directly to the secondary mortgage market. It's no surprise they oppose our innovation that provides new mortgage products and technologies to thousands of small and medium-size lenders, including mortgage banks, community banks, and credit unions. Freddie Mac strives to level the playing field for all lenders; the winner is the consumer, who has greater access to low-cost mortgage credit.

The public relations gambit behind FM Watch may well continue. Freddie Mac's response is simple: We will continue to aggressively pursue our congressional mission, working with lenders and others to provide the most reliable low-cost source of mortgage money to millions of families. We will do it safely and soundly, with a keen focus on helping families build wealth through homeownership.

We're happy to be on the side of the debate that makes the housing dreams of America's families a reality.

Leland C. Brendsel
Chairman and chief executive officer
Freddie Mac
McLean, Va.

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