Freddie Mac

Freddie Mac (Federal Home Loan Mortgage Corporation)

A Congressionally chartered corporation that purchases residential mortgages in the secondary market from S&Ls, banks, and mortgage bankers and securities for sale in the capital markets.

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Freddie Mac

1. A stockholder-owned corporation chartered by Congress in 1970 to help supply funds to mortgage lenders such as commercial banks, mortgage bankers, savings institutions, and credit unions that in turn make funds available to homeowners and multifamily investors. Freddie Mac purchases mortgages from lenders and then packages the mortgages into guaranteed securities that are sold to investors. The firm's common stock trades as FRE on the New York Stock Exchange. Formerly called Federal Home Loan Mortgage Corporation.

2. A security that is issued by this corporation and is secured by pools of conventional home mortgages. Holders of Freddie Macs receive a share of the interest and principal payments made by the homeowners.

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Freddie Mac. Freddie Mac is a shareholder-owned corporation that was chartered in 1970 to increase the supply of mortgage money that lenders are able to make available to homebuyers.

To do its job, Freddie Mac buys mortgages from banks and other lenders, packages them as securities, and sells the securities to investors. The money it raises by selling these bonds pays for purchasing the mortgages.

Lenders use the money they realize from selling mortgages to Freddie Mac to make additional loans. Lenders must be approved in order to participate in the program. Loans must meet Freddie Mac qualifications to be eligible for purchase.

To facilitate the lending process, Freddie Mac provides lenders with an automated underwriting tool to help them evaluate mortgage applications.

Freddie Mac guarantees the securities it issues, but the bonds aren't federal debts and aren't federally guaranteed.

Like its sister corporation Fannie Mae, Freddie Mac shares are traded on the New York Stock Exchange (NYSE).