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Freddie Mac

Definition - What does Freddie Mac mean?

Freddie Mac is a publicly traded corporation that is chartered by Congress. This corporation primarily takes part in buying mortgages on the secondary market, and then reselling them. To resell these mortgages, Freddie Mac converts them into mortgage-backed securities. The purpose of Freddie Mac is to help funds remain available for residential mortgage lenders.

Justipedia explains Freddie Mac

Freddie Mac competes with Fannie Mae, a similar company. The government views this competition as healthy. Both corporations are federally backed. Freddie Mac typically buys mortgages from banks and mortgage bankers. By purchasing these mortgages, Freddie Mac gives mortgage lenders more confidence to lend people money for new mortgages. This is because the mortgage lenders know that there is a strong secondary market for the mortgages—should they have the need to sell them and therefore clear their risk.

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