Question:

Who are the Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac)?

Answer:

The Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac) are dedicated to helping families afford quality homes or rental housing by reducing the interest cost of homeownership. Low-income and minority households are a special niche, targeted by Freddie Mac.

The Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac) is a major player in the secondary mortgage market in America

What does the Federal Home Loan Mortgage Corporation (Freddie Mac) do?

Consumers apply for home mortgage loans through banks, credit unions, thrifts, private mortgage lenders and companies, online mortgage lenders and brokers. These are the primary market home loan lenders who extend money directly to borrowers. Those lenders underwrite the loans so that they could sell most of them on the secondary home loan mortgage market. Some primary lenders would also hold their own portfolio of mortgage loans.

Freddie Mac (like Fannie Mae) is a quasi-government entity that purchases loans from primary home loan mortgage lenders and packages them into mortgage-backed securities (MBS) to sell those securities on Wall Street. Selling MBSs to Wall Street investors allows Freddie Mac to replenish their funds and buy new loans, thus making the mortgage process smooth and effective.

Home loan mortgages purchased by the Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac) have to be underwritten under specific Freddie Mac criteria to provide high quality to investors.

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