Freddie Mac

Federal Home Loan Mortgage Corporation is mortgage lending company created by the US congress to provide real estate mortgages to consumers. These mortgages are sponsored by the US government however Freddie Mac is a private firm until the mortgage crisis in 2008 when the US government took over. Freddie Mac purchases these mortgages from banks and repackages them as securities to be sold to investors. The interest payments made by borrowers are used as the income streams that makes these securitized mortgages attractive to some investors. Freddie Mac can dictate the rate at which banks can provide more home loans to customers. This is done by raising or lowering their standards on picking which mortgages are bought from the bank. If Freddie Mac purchases more risky mortgages from banks, these commercial banks would be more enticed to provide high risk loans to their clients since their mortgages will be backed by this government sponsored agency, Freddie Mac.

Stocks | Forex | Options | Economics | Bonds | History | Language learning | Technology | Technical Analysis | Fundamental Analysis
Copyright © 2014 econtrader | Risk disclosure | Terms of Use