Freddie Mac Foreclosures
Freddie Mac is a shareholder-owned and government-sponsored enterprise that, along with its sister Fannie Mae, creates liquidity within the mortgage market. It's a corporation secured by a pool of conventional home mortgages. Freddie Mac packages home loans that lenders have made, and sells them to Wall Street. It's customers are predominately lenders in the primary mortgage market. The secondary market is where buyers such as Freddie Mac and Fannie Mae buy notes created by the lenders. They package up these notes in large bundles (sometimes several million dollars worth of lenders' notes) and gets investors to buy into Freddie Mac at a guaranteed rate of return. Then Fannie Mae and Freddie Mac pay the lenders for the notes so the lenders have additional funds to make more loans with. As you can see lending institutions extend mortgage loans directly to their customers who wish to purchase or refinance a home. Most lenders look to Freddie Mac to purchase those mortgages from them, replenishing the supply of money for lending.
When Freddie Mac buys the notes lenders have created it keeps the cash available to home buyers at a higher level. Freddie Mac buys about 8 mortgages per minute in our country. This constitutes about one out of every six homes sold in America. Freddie Mac also buys mortgages for multifamily buildings.
When Freddie Mac purchases a note from a lender sometimes the lender continues to service the debt. So, the homeowner sends their monthly payment to the lender, who keeps a small percentage of the payment as a servicing fee, and the rest of the money goes to Freddie Mac who then passes the balance of the funds to the investors who purchased the package of real estate notes. Freddie Mac allows millions of Americans to secure funds to purchase their dream homes. Congress defined Freddie Mac’s purpose in 1970, which laid the foundation of Freddie Mac for doing business and its goals. It's goals are to keep the supply of money for lenders to make home loans, to refinance existing loans. Freddie Mac has focused some of its funds towards helping low and moderate low income buyers. If Freddie Mac wasn’t willing to purchase the notes created, some lenders would choose not to make these loans. In recent months you have heard about the problems with Freddie Mac. The CEO received millions of dollars of bonus based on the volume of loans Freddie Mac handled. In so doing, many of the notes went into default because lenders were not forced to make good decisions. The entire process of lending was compromised because lenders were not being asked to make sure they were making good loans, they were just asked where the loans are. Freddie Mac was saying we need more loans, so we can produce more volume, thus creating more bonuses for our top executives. Greed is one major part of the problem our country faces today.
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Freddie Mac foreclosures are owned by the Federal Home Loan Mortgage Corporation (FHLM). It’s a federally-chartered corporation that purchases residential mortgages.