Instead, it buys mortgages from lenders, combines similar ones into bundles (usually 1,000 or more), then sells them as an MBS to institutional investors, insurance companies, pension funds, and even Fannie Mae. Fannie Mae, on the other hand, works with major commercial and retail banks.įreddie Mac is not a lender, nor does it guarantee mortgages in the traditional sense. While the two agencies have similar charters and perform the same general role, Freddie Mac works exclusively with smaller community banks and thrift associations. government is the largest owner of Freddie Mac’s stock, holding approximately 80% of its common and preferred stock.įreddie Mac and its sibling Fannie Mae hold over half of all residential mortgage debt in the United States. It currently operates as a shareholder-owned organization. Freddie Mac was originally chartered in 1970 to ensure liquidity in the housing market.
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