Freddie Mac – Federal Home Loan Mortgage Corporation

October 3, 2009 | Posted by Staff

Freddie Mac is a government sponsored enterprise created in the 1970’s to increase the rate of home ownership. If you have a home loan held by them and are having difficulty making payments you may be eligible for assistance.

Freddie Mac Headquarters

The Federal Home Loan Mortgage Corporation, often referred to as Freddie Mac, was established by the federal government as a way to encourage the domestic real estate market. Freddie Mac’s role is to buy mortgages or mortgage contracts on the secondary markets in order to increase the cash available to direct lenders. What this means is that Freddie Mac purchases or guarantees the mortgages that lenders issue to homeowners, this limits the lenders risk and frees up money for them to offer more loans. It was started primarily to compete with Fannie Mae, the government sponsored enterprise that has been around since the great depression in its mandate to improve the rate of home ownership.

In 2008 at the height of the housing crisis Freddie Mac was placed under the control of the US government. It was estimated at that time that Freddie Mac and Fannie Mae, the two semi public institutions, backed or owned more than one half of the $12 trillion US property loan market. In 2007 Freddie Mac reported a revenue of over $40 billion while experiencing an operating income loss of almost $6 billion. It’s net income in 2007 amounted to losses of approximately $3.1 billion while its total assets were values at a staggering $794 billion.

With all of their assets and business units linked to the real estate market the turmoil of 2008 had a devastating impact. The drop in real estate value left the institution scrambling for money. The US Government was forced to step in and back the troubled organization. In exchange for providing the much needed financial support of the taxpayers the federal government gained significant influence on the policies and programs of Freddie Mac.

To assist struggling home owners the government has implemented the Make Home Affordable Program. This program is funded by the economic recovery act passed by congress and is designed to provide mortgage relief to home owners who are behind in their monthly payments. In exchange for the fiduciary support of the government Freddie Mac is obligated to work with distressed borrowers to find mortgage restructuring solutions that reduce financial strain. Depending on the details of a borrowers situation there are several programs including loan modification and mortgage refinancing that my be used to change contracts and payment terms.

If you are a struggling home owner and your mortgage is backed by either Freddie Mac or Fannie Mae you should be qualified for assistance. Contact either of those organizations to find help. If they are not the guarantors of your loan then can assist you in determining what company is and guide you in the right direction for assistance.

Categories: Government Agency | Tags: Freddie Mac, make home affordable | No Comments »