|
Understanding
Freddie Mac:
What is Freddie Mac?
The
United States
Federal Government defined the role of Freddie Mac in 1970.
Prior to this the Fannie Mae program was the only program in existence
to help make affordable housing available to more Americans. Like
Fannie Mae, Freddie Mac makes money available for lower income families
to experience the joy and the dream of homeownership. They do this
by providing money in the
secondary mortgage market which helps to
replenish the supply of lendable money for mortgages and ensures that
money continues to be available for new home purchases.
Freddie Mac programs specialize in helping first time home buyers,
buyers with less than perfect credit and buyers who have lower to
moderate incomes. These programs are designed to make the
dream of homeownership a reality for more people across America.
Freddie Mac does
NOT lend money directly to the consumer. Instead, they make money
available to the borrow by purchasing mortgages from the mortgage
companies who originate the loans. They then sell bonds backed by
these mortgages to private investors through the securities (stocks and
bonds) market.
|
Comparison of
Freddie Mac to other Federal Mortgage Programs |
|
Program |
Primary Beneficiary |
Cost |
Direct Government Program |
Loan Limit (Single Family) |
|
Fannie Mae |
Low/Moderate Incomes |
Low |
No - Multiple private lenders |
$359,650 |
|
FHA |
Lower Income/First Time Buyer |
Low |
Yes - Insures Mortgages |
$359,650
|
|
Freddie Mac |
Lower Income/First Time Buyer |
Low |
Yes |
$359,650
|
|
VA |
Veterans |
Low |
Yes |
None |
|
