Federal Home Loan Mortgage Corporation (FHLMC)
Definition and meaning of Federal Home Loan Mortgage Corporation (FHLMC) in real estate.
The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, is a congressionally chartered, shareholder-owned enterprise that buys home loans from lenders and packages them into securities. This entity helps keep the housing market stable and affordable by maintaining a steady flow of mortgage funds.
In more detail
Freddie Mac operates in the secondary mortgage market, purchasing loans from savings banks and other lending institutions rather than lending to consumers directly. Like its sister entity Fannie Mae, Freddie Mac sets specific guidelines for conforming mortgages, specifying credit requirements, debt limits, and maximum loan amounts.
Lenders package loans meeting these standards to sell to Freddie Mac, which frees up capital for them to write new loans. This process ensures that mortgage financing remains readily available to home buyers across the country. Borrowers benefit from these standards because conforming loans generally feature lower interest rates than non-conforming options.
Key facts
| Category | Mortgages & Financing |
|---|---|
| Common name | Freddie Mac |
| Primary function | Buys mortgages to provide liquidity to the secondary market |
| Target market | Conforming conventional residential home loans |
A mortgage lender sells a batch of newly closed loans to the Federal Home Loan Mortgage Corporation to recover cash and issue new mortgages to buyers.
Frequently asked questions
What is the difference between Freddie Mac and Fannie Mae?
Both are government-sponsored enterprises with similar roles, but Fannie Mae historically purchased loans from larger commercial banks, while Freddie Mac bought from smaller savings associations.
Can I get a home loan directly from Freddie Mac?
No, Freddie Mac is not a direct lender and only buys mortgages from originating banks and mortgage companies.