Freddie Mac, or the Federal Home Loan Mortgage Corporation (FHLMC), is a government-sponsored enterprise (GSE) that plays an important role in the mortgage industry and the process of buying and selling a home. It was created in 1970 to expand the secondary market for mortgages in the US. Along with its sister organization, Fannie Mae, Freddie Mac buys mortgages, pools them, and sells them as a mortgage-backed security (MBS) to private investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases.
Freddie Mac doesn’t provide loans directly to home buyers but instead buys bundled mortgages from banks and other mortgage lenders. It purchases loans on apartment buildings from its network of Optigo® lenders, then bundles these loans into securities for investors – ensuring liquidity, stability, and affordability in the market. Freddie Macs primary method of making money is by charging a guarantee fee on loans that it has purchased and securitized into mortgage-backed security (MBS).
In summary, Freddie Mac is a government-sponsored enterprise that buys mortgages from lenders and sells them as mortgage-backed securities to private investors on the open market. It plays an important role in the mortgage industry and helps increase the supply of money available for mortgage lending and new home purchases.
