Freddie Mac

Freddie Mac

Freddie Mac, officially known as the Federal Home Loan Mortgage Corporation (FHLMC), is a government-sponsored enterprise (GSE) established in 1970 to enhance the Liquidity, stability, and affordability of the U.S. housing market. It primarily functions by purchasing mortgage loans from lenders, pooling them, and selling mortgage-backed Securities (MBS) to investors. This process helps to provide funding for new mortgages and support the housing market.

Examples

• Mortgage Purchase: A lender sells a bundle of mortgages to Freddie Mac, which then issues MBS backed by those loans, allowing the lender to rEINvest the proceeds into more loans.
• Home Affordability Programs: Freddie Mac offers programs such as Home Possible, aimed at helping low- to moderate-income borrowers access affordable financing Options.

Cases

• 2008 Financial Crisis: Freddie Mac faced significant losses due to the housing market collapse, leading to a government Conservatorship to stabilize its operations and protect taxpayers.
• Recent Initiatives: In response to ongoing housing affordability issues, Freddie Mac has implemented various initiatives to support first-time homebuyers and encourage responsible lending practices.