Understanding the Federal Home Loan Mortgage Corporation (FHLMC) and Its Role in the Housing Market
Definition & Meaning
The Federal Home Loan Mortgage Corporation (FHLMC), commonly known as Freddie Mac, is a government-sponsored enterprise established by Congress in 1970. Its primary purpose is to support the secondary mortgage market in the United States. By doing so, it aims to:
- Expand the availability of mortgage funds.
- Increase the supply of money for mortgage lending.
- Facilitate new home purchases, especially for low and moderate-income families.
Freddie Mac plays a crucial role in ensuring that mortgage loans are accessible to a broader range of people, thereby contributing to homeownership opportunities across the nation.
Legal Use & context
Freddie Mac is primarily involved in the mortgage and housing finance sectors. It operates under federal law and is subject to oversight by various regulatory bodies. The FHLMC is involved in:
- Purchasing mortgages from lenders, which helps to free up capital for those lenders to issue more loans.
- Issuing mortgage-backed securities, which are sold to investors to raise funds for further lending.
Legal professionals may encounter Freddie Mac in cases involving mortgage agreements, housing finance, and regulations governing government-sponsored enterprises. Users can utilize US Legal Forms templates to create documents related to mortgage transactions or agreements with Freddie Mac.
Real-world examples
Here are a couple of examples of abatement:
Here are a couple of examples of how Freddie Mac operates:
- A lender sells a pool of mortgages to Freddie Mac. This allows the lender to have more liquidity to issue new loans.
- Freddie Mac issues mortgage-backed securities that are purchased by investors, providing funds that are then used to finance new home loans. (hypothetical example)