Real Estate Glossary

What is Federal Home Loan Mortgage Corporation, Law?

The Federal Home Loan Mortgage Corporation (Freddie Mac) is a government-sponsored enterprise (GSE) that was created by the U.S. Congress in 1970 to provide stability and liquidity to the secondary mortgage market. Like Fannie Mae, it operates in the secondary mortgage market, buying mortgages from primary lenders and repackaging them as mortgage-backed securities (MBS) to be sold to investors. The corporation is subject to regulation by the Federal Housing Finance Agency (FHFA), and its operations are governed by the Federal Home Loan Mortgage Corporation Act, which is the law that created the GSE. This law establishes the purpose and mission of Freddie Mac, sets out the powers and authorities of the corporation, and establishes the framework for its operations and governance. One of the main objectives of the Federal Home Loan Mortgage Corporation Act is to increase the availability of mortgage credit by creating a secondary market for mortgages. The law also aims to increase the efficiency of the secondary market and to help stabilize the mortgage market by providing a source of liquidity. Freddie Mac is also committed to promoting access to credit and affordable housing to underserved communities and populations, which aligns with the purpose of the Act. This is achieved through different initiatives and programs that are designed to reach out to specific populations such as low-income families, veterans and seniors. Similar to Fannie Mae, in 2008 the Federal Home Loan Mortgage Corporation was placed into conservatorship by the FHFA and it's now also owned by the U.S government and operates as a separate legal entity.