Freddie Mac is a federally funded government-sponsored enterprise (GSE) that plays a big role in the housing industry. Founded in 1970 to broaden the secondary mortgage market, Freddie Mac provides the financing that the banks need to offer more loans to more homebuyers. It has grown its investor base to 220 unique investors. Moreover, the company has been a proponent of the risk-sharing model, which has led to some interesting innovations in the lending space.
Freddie Mac is not all about mortgages; it also provides the mortgage-backed security market with the liquidity that it needs. The organization also has a robust marketing program, aimed at preserving the industry’s momentum. In fact, Freddie Mac has been known to offer borrowers free informational webinars on mortgages.
Freddie Mac’s credit-sharing models have led the way in new credit risk-sharing offerings in the industry. One of the best examples of the Freddie Mac model is the Home Possible mortgage program, which enables lenders to offer up to 30 years of mortgages to more eligible borrowers. For instance, a Freddie Mac customer may qualify for a Home Possible loan with as little as a 1% down payment and a 3.5% interest rate.
While Freddie Mac isn’t your standard bank, it has played a part in deflating the interest rate risk that has plagued many a major lender. This is thanks to a clever step-by-step breakdown of the mortgage-lending process that has made the home-buying process less onerous and more streamlined.
Freddie Mac is one of the most important players in the industry, and while it’s a crowded field, it’s a name that will ring a bell in your ear. Make sure to shop around for the cheapest rates. You can even ask a Freddie Mac loan officer about a few special programs they may be offering. If you’re a savvy shopper, you’ll be rewarded with an affordable mortgage and the satisfaction of knowing you helped make the housing market better for everyone.