Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. Table of Contents Expand. Table of Contents. Definition and Examples of Freddie Mac. How Freddie Mac Works. What It Means for Individuals. Notable Events. By Terri Williams. Learn about our editorial policies.
Reviewed by Robert C. Learn about our Financial Review Board. Key Takeaways Freddie Mac makes mortgage lending less risky. It expands the pool of buyers by making homeownership more affordable.
Freddie Mac creates a standardized mortgage-lending process. It helps to maintain a robust housing marketing. Article Sources. Your Privacy Rights. Freddie Mac operates in the U. With the money that lenders receive in return, they can make loans to other qualified borrowers.
In securitizing pools of mortgages and selling the securities to investors, we shift a significant portion of the credit risk associated with the loans we own to private investors.
We conduct business through two business segments, the single-family business segment and the multifamily business segment. Our single-family business segment supports responsible, sustainable homeownership. Those divisions work with lenders of all sizes — national, regional, and community lenders and credit unions — to buy conventional, conforming mortgage loans for one- to four-unit homes — including condominiums and manufactured homes — up to a certain dollar amount set by our regulator.
As part of our mission, we are committed to creating homeownership opportunities for people hoping to buy a home for the first time, earning low and moderate incomes, and living in underserved markets. Because lenders know they can sell loans to us, they are more willing to make long-term, fixed-rate loans, which make mortgage payments more affordable to more households.
Lenders use the cash raised by selling mortgages to the Enterprises to engage in further lending. By packaging mortgages into MBS and guaranteeing the timely payment of principal and interest on the underlying mortgages, Fannie Mae and Freddie Mac attract to the secondary mortgage market investors who might not otherwise invest in mortgages, thereby expanding the pool of funds available for housing.
That makes the secondary mortgage market more liquid and helps lower the interest rates paid by homeowners and other mortgage borrowers. Fannie Mae and Freddie Mac also can help stabilize mortgage markets and protect housing during extraordinary periods when stress or turmoil in the broader financial system threaten the economy.
Fannie Mae was first chartered by the U. Today it is a shareholder-owned company that operates under a congressional charter. Freddie Mac was chartered by Congress in as a private company to likewise help ensure a reliable and affordable supply of mortgage funds throughout the country. It looks like your browser does not have JavaScript enabled.
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