Created by Congress in 1970, Freddie Mac (Federal Home Loan Mortgage Corporation, or FHLMC) is a government-sponsored enterprise (GSE) designed to support the US housing market. The company is owned by its shareholders and makes money primarily by purchasing residential mortgages from lenders and then packaging them into securities.
Freddie Mac is a crucial part of the US housing finance system because it is both a major provider of mortgage funds and a major source of liquidity for lenders. Because the company purchases residential mortgages from lenders across the country and packages them into investment securities, it provides a level of assurance to lenders that they will be able to sell their mortgages and obtain financing for the loans they originate. Therefore, Freddie Mac helps lenders provide more mortgage options to their borrower customers.
Like Fannie Mae, Freddie Mac has faced criticism for their role in causing the housing crisis of 2008. The company became a target of scrutiny for taking on too much risk and having too lax lending standards, contributing to the widespread mortgage defaults that caused a major disruption in the US housing market.
Today, Freddie Mac operates in a different capacity than before the housing crisis. It has been providing money to more financial institutions to help make loan modifications more affordable, while also maintaining tighter lending requirements than before. Freddie Mac also works with community organizations, local governments and lenders to provide more homeownership opportunities to underserved communities. Additionally, Freddie Mac supports refinancing in order to help more homeowners reduce the costs of their existing mortgages.
By adopting responsible lending practices and offering more mortgage options, Freddie Mac helps drive the US housing market and promote financial stability. Despite the criticism it has faced in the past, the company is committed to helping more Americans achieve their dream of homeownership.
Freddie Mac is a crucial part of the US housing finance system because it is both a major provider of mortgage funds and a major source of liquidity for lenders. Because the company purchases residential mortgages from lenders across the country and packages them into investment securities, it provides a level of assurance to lenders that they will be able to sell their mortgages and obtain financing for the loans they originate. Therefore, Freddie Mac helps lenders provide more mortgage options to their borrower customers.
Like Fannie Mae, Freddie Mac has faced criticism for their role in causing the housing crisis of 2008. The company became a target of scrutiny for taking on too much risk and having too lax lending standards, contributing to the widespread mortgage defaults that caused a major disruption in the US housing market.
Today, Freddie Mac operates in a different capacity than before the housing crisis. It has been providing money to more financial institutions to help make loan modifications more affordable, while also maintaining tighter lending requirements than before. Freddie Mac also works with community organizations, local governments and lenders to provide more homeownership opportunities to underserved communities. Additionally, Freddie Mac supports refinancing in order to help more homeowners reduce the costs of their existing mortgages.
By adopting responsible lending practices and offering more mortgage options, Freddie Mac helps drive the US housing market and promote financial stability. Despite the criticism it has faced in the past, the company is committed to helping more Americans achieve their dream of homeownership.