What is 'Freddie Mac - Federal Home Loan Mortgage Corp - FHLMC'

Freddie Mac (FHLMC) is a stockholder-owned, government-sponsored enterprise (GSE) chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing for middle income Americans. The FHLMC purchases, guarantees and securitizes mortgages to form mortgage-backed securities. The mortgage-backed securities that it issues tend to be very liquid and carry a credit rating close to that of U.S. Treasuries.

Also known as "Freddie Mac."

BREAKING DOWN 'Freddie Mac - Federal Home Loan Mortgage Corp - FHLMC'

Freddie Mac has come under criticism because its ties to the U.S. government allows it to borrow money at interest rates lower than those available to other financial institutions. With this funding advantage, it issues large amounts of debt (known in the market place as agency debt or agencies), and in turn purchases and holds a huge portfolio of mortgages known as its retained portfolio. Many people believe that the size of the retained portfolio poses a great deal of systematic risk to the entire U.S.

RELATED TERMS
  1. Gnomes

    15-year, fixed-rate, pass-through securities offered by the Federal ...
  2. Nonconforming Mortgage

    A mortgage that does not meet the guidelines of Government Sponsored ...
  3. Mortgage Participation Certificate

    A type of security that groups together Freddie Mac conventional ...
  4. Agency Swap Program

    A form of securitization whereby single-family residential mortgages ...
  5. Lehman Brothers Mortgage-Backed ...

    An index made up of mortgage-backed securities that is used for ...
  6. Mortgage Pool

    A group of mortgages held in trust as collateral for the issuance ...
Related Articles
  1. Investing

    Fannie Mae and Freddie Mac, Boon Or Boom?

    These two companies are crucial to the mortgage market, but are they ticking timebombs?
  2. Personal Finance

    Why Fannie Mae And Freddie Mac Might Be In Trouble

    Fannie Mae and Freddie Mac are under increased scrutiny as debates continue about conservatorship, share price, and profit allocations.
  3. Insights

    How Fannie Mae And Freddie Mac Were Saved

    These mortgage giants had to be put under government conservatorship, driving home the gravity of the subprime crisis.
  4. Personal Finance

    New Rules May Make It Easier to Get a Mortgage

    Fannie Mae and Freddie Mac have come to terms with lenders on how to solve mortgage disputes. This could be good news for people with lower credit ratings.
  5. Insights

    How Interest Rates Affect the Housing Market

    Understand how rate changes can affect home prices and learn how you can keep up.
  6. Investing

    Mortgage Rates To Rise, But When And By How Much?

    Mortgage rates have been at historical lows since 2008 following the financial crisis. They're expected to rise, but when and by how much?
  7. Insights

    Freddie Mac May Follow Fannie Mae Into Rental Market

    Freddie Mac may follow Fannie Mae's example and guarantee financing in the single-family rental market.
  8. Personal Finance

    Conventional Mortgage

    A conventional mortgage is any type of homebuyer's load that is not offered or secured by a government entity but rather available through a private lender.
  9. Investing

    What is Securitization?

    Securitization is the process of converting an asset, or group of assets, into a marketable security. Often times, the securitized assets are divided into different layers, or tranches, tailored ...
  10. Personal Finance

    Reform of Freddie & Fannie: Trouble Ahead

    The U.S. Treasury is mulling a plan to remove its $258 billion backstop for the GSE mortgage giants, which could roil the markets.
RELATED FAQS
  1. What are the best ways to invest in mortgage-backed securities (MBS)?

    Find out how you can start investing in real estate through mortgage-backed securities. Read Answer >>
  2. If My Mortgage Lender Goes Bankrupt, Do I Still Have to Pay My Mortgage?

    Yes, if your mortgage lender goes bankrupt you do still need to pay your mortgage obligation. Here's what usually happens ... Read Answer >>
  3. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ... Read Answer >>
  4. How does Fannie Mae (FNMA) make money?

    Fannie Mae is a government-sponsored enterprise (GSE) established in 1938 to expand the flow of mortgage money by creating ... Read Answer >>
  5. What is securitization?

    Securitization is the process of taking an illiquid asset, or group of assets, and through financial engineering, transforming ... Read Answer >>
Trading Center