Freddie Mac

America’s leading buyers of home mortgages Freddie Mac, is a stockholder-owned entity licensed by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing.


Freddie Mac’s agenda since its foundation by Congress in 1970 is to offer liquidity, stability and affordability to the housing market.

This undertaking works as an essential framework for the business product and services for the nation's housing and mortgage industry.

Everything done by FreddieMac is, to making America's mortgage markets liquid and stable and increasing opportunities for homeownership and affordable rental housing across the nation. It emphasise to create:

Stability: Freddie Mac's retained portfolio plays an important role in assuring that there's a sound and consistent supply of money for lenders to make the home loans, that new homebuyers would need and an available supply of workforce housing in communities.
Affordability: To financing the housing for low- and moderate-income families has been a key part of Freddie Mac's business from it inception. Freddie Mac's vision is that families must be able to both purchase a home as well as keep it too.
Liquidity: Freddie Mac makes sure that there's a stable supply of money for lenders to make the loans new homebuyers would require. This gives everyone better access to home financing, raising the roof on homeownership opportunity in America.

Business Objectives

Congress created Freddie Mac in 1970, with some prime objectives. They are as follows:-
* Financial institutions have sufficient mortgage money to lend ..
* Make it easier for consumers to afford a decent house or apartment
* Stabilize residential mortgage markets in times of financial crisis.
To complete this mission, Freddie Mac conducts business in the U.S. secondary mortgage market, which means it does not originate loans and works with a national network of mortgage lending customers. It has three business lines, namely: -
*Single Family Credit Guarantee business for home loans;
* Multifamily business for apartment financing
*Investment portfolio.

Policy Benefits

The activities performed by Freddie Mac’s business lines have certain public policy benefits. It has a consistent market presence, providing mortgage liquidity in a wide range of economic environments. This has become significant during the credit crunch that had begun towards the half of 2007 and resulted in the exit of most other mortgage fund givers from the market. Indeed, in 2008 Freddie Mac and Fannie Mae funded 74 percent of all new home loans and an even higher percentage of multifamily loans.
Another benefit for the consumers is that they have typically paid less on home loans funded by Freddie Mac or Fannie Mae, because investors usually place a greater value on its mortgage securities. It has been able to pass this premium ultimately to the homebuyers in the form of lower mortgage rates. During normal or flush markets, where there are many sources of mortgage funds, homebuyer savings on its loans have averaged about 0.30 percent (or 30 basis points). During the current credit crunch, however, mortgage rate savings have been high as 1.84 percent (or 184 basis points). All these benefits accrue the most to families of modest financial means. Indeed, the majority of home loans that it fund support low- and moderate-income families, reflecting affordable housing goals set forth by the federal government.

Foreclosure Prevention

In addition to its financing functions, Freddie Mac has taken a leadership role in establishing and enforcing best practices and standards in foreclosure prevention for many years now. Some of its recent efforts include:-
Implementing a moratorium on foreclosure sales
Launching a rental initiative that lets former borrowers and existing renters temporarily stay in their homes after foreclosure with month-to-month leases
Suspending evictions triggered by foreclosures
Providing financial incentives to our servicers to do more loan workouts for borrowers
Increasing our servicing staff to help facilitate more workouts
Streamlining our documentation requirements for loan workouts
Working with national and local media to disseminate the latest in borrower options and programs
Sharing information with the housing industry, including attorneys, real estate professionals, local agencies, and consumer and civil rights organizations

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