Federal Home Loan Mortgage Corporation (FHLMC)

February 07, 2025 06:14 PM AEDT | By Team Kalkine Media

Google News:

Federal Home Loan Mortgage Corporation (FHLMC) — Image source: shutterstock

Recent News

Celebrating the Future of Accounting - One Student at a Time

ASX 200 Dips as Market Swings on Trade Uncertainty; Utilities Cushion...

Panduit Wins Asia Responsible Enterprise Award 2025 for Empowering You...

Antipa Minerals Drives Minyari PFS with Equity Raise | ASX 300

Highlights

A government-sponsored enterprise (GSE) that provides liquidity to the U.S. housing market.

Commonly known as Freddie Mac, it buys mortgages and sells mortgage-backed securities.

Helps stabilize mortgage rates and promotes homeownership affordability.

The Federal Home Loan Mortgage Corporation (FHLMC), widely recognized as Freddie Mac, is a government-sponsored enterprise (GSE) established to support stability and affordability in the U.S. housing market. Created in 1970, it operates under the Federal Housing Finance Agency (FHFA) and plays a crucial role in ensuring that mortgage funds remain available to lenders, homebuyers, and investors.

Role and Functions

Freddie Mac's primary function is to purchase mortgages from lenders such as banks and credit unions. By doing so, it injects fresh capital into the lending market, allowing financial institutions to offer more loans to homebuyers. After acquiring these mortgages, Freddie Mac packages them into mortgage-backed securities (MBS), which are then sold to investors. This process helps create a continuous flow of capital, keeping mortgage rates stable and homeownership within reach for millions of Americans.

Impact on the Housing Market

The presence of Freddie Mac in the mortgage market has several benefits:

Liquidity for Lenders – By buying mortgages, Freddie Mac enables lenders to issue new loans.
Lower Borrowing Costs – The securitization of loans contributes to competitive mortgage rates.
Economic Stability – It helps reduce fluctuations in the housing market during financial crises.

Regulation and Oversight

Freddie Mac is regulated by the Federal Housing Finance Agency (FHFA), ensuring it operates within guidelines that support the housing market while minimizing risks. Following the 2008 financial crisis, the company was placed under government conservatorship, strengthening regulatory oversight to prevent another housing market collapse.

Conclusion

Freddie Mac remains a pillar of the U.S. housing finance system, ensuring a steady flow of mortgage funds, stabilizing interest rates, and promoting affordable homeownership. Through its role in mortgage securitization and liquidity provision, it continues to be a key driver of economic stability and growth in the housing sector.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.