Freddie Mac is the commonly used name of the Federal Home Loan Mortgage Corporation or FHLMC. It is a government-sponsored public company headquartered in the state of Virginia in the US. It is important to note that Freddie Mac does not offer mortgages directly to consumers. Instead, they purchase and guarantee mortgages via lenders such as banks and mortgage providers in the secondary mortgage market.
Freddie Mac is often compared to the Federal National Mortgage Association (FNMA) commonly known as Fannie Mae. Both are government-sponsored, publicly traded companies aimed at raising homeownership and increasing the availability of affordable housing.
Basically, financial institutions and banks sell mortgages to Freddie Mac or Fannie Mae in exchange for cash. This assists those financial institutions in providing more mortgages, which in turn should help consumers and individuals obtain financing for homes.
It is also compared at times to the Government National Mortgage Association or Ginnie Mae. While both organizations serve similar purposes, Ginnie Mae tends to focus on unconventional loans. Unlike Freddie Mac, Ginnie Mae is fully owned by the US government.
Freddie Mac was formed as part of President Roosevelt’s new deal in 1938 and became a publicly-traded company 30 years later in 1968. Both Freddie Mac and Fannie Mae were virtual monopolies in the secondary mortgage markets until the 1990s. In the 1990s, the US Federal Government allowed other financial organizations such as banks to compete in the secondary mortgage market. Even with competition, Freddie Mac and Fannie Mae are the 2 largest players in the secondary mortgage market.