Study notes. AI-assisted reference for NMLS SAFE exam prep — verify against primary sources (CFR, statute, CFPB) before relying on it. Not legal advice.
Freddie Mac
gsesecondary-market
Freddie Mac, officially the Federal Home Loan Mortgage Corporation (FHLMC), is a government-sponsored enterprise (GSE) that, along with Fannie Mae, is central to the U.S. secondary mortgage market. Established in 1970, its mission is to provide liquidity, stability, and affordability to the housing market by purchasing mortgages from lenders.
Freddie Mac's functions include:
- Purchasing Mortgages: Buying conventional mortgages from banks and other lenders, which allows these lenders to replenish their funds and originate more loans.
- Securitization: Packaging these purchased mortgages into mortgage-backed securities (MBS) and selling them to investors, thereby attracting capital to the housing market.
- Developing Standards: Setting guidelines for loan origination and servicing that lenders must follow for their loans to be eligible for purchase by Freddie Mac.
Similar to Fannie Mae, Freddie Mac was involved in the GSE Patch, a temporary category of Qualified Mortgage (QM) loans that were eligible for purchase by the GSEs. This patch expired in July 2021.
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