Federal Home Loan Mortgage Corp
OTC:FMCC
Federal Home Loan Mortgage Corp
Born out of a desire to stabilize the housing market and improve access to homeownership, the Federal Home Loan Mortgage Corporation, affectionately known as Freddie Mac, was established in 1970. This influential organization plays a pivotal role in the secondary mortgage market, buying mortgages from banks and other loan originators. By doing so, Freddie Mac provides these lenders with the liquidity they need to fund additional home loans. It acts as an intermediary, packaging the purchased mortgages into securities and selling them to investors. Through this process, it manages to embed a sense of reliability and continuity within the US housing finance system, ensuring that lenders always have the capacity to support potential homeowners.
Freddie Mac's business model is deftly crafted around earning revenue through guarantee fees. These fees are collected by providing assurances to investors against the potential risk of default on the underlying mortgages in the mortgage-backed securities. Essentially, they charge a premium for the perceived stability and low-risk nature of their asset-backed investments. In doing so, Freddie Mac does not take on the monstrous risk associated with holding millions of home loans on its balance sheet; rather, it spreads the risk across a broad investor base. This makes Freddie Mac a cornerstone of the modern American mortgage market, quietly underpinning the household dreams of many by facilitating an ongoing infusion of capital into the housing sector.
Born out of a desire to stabilize the housing market and improve access to homeownership, the Federal Home Loan Mortgage Corporation, affectionately known as Freddie Mac, was established in 1970. This influential organization plays a pivotal role in the secondary mortgage market, buying mortgages from banks and other loan originators. By doing so, Freddie Mac provides these lenders with the liquidity they need to fund additional home loans. It acts as an intermediary, packaging the purchased mortgages into securities and selling them to investors. Through this process, it manages to embed a sense of reliability and continuity within the US housing finance system, ensuring that lenders always have the capacity to support potential homeowners.
Freddie Mac's business model is deftly crafted around earning revenue through guarantee fees. These fees are collected by providing assurances to investors against the potential risk of default on the underlying mortgages in the mortgage-backed securities. Essentially, they charge a premium for the perceived stability and low-risk nature of their asset-backed investments. In doing so, Freddie Mac does not take on the monstrous risk associated with holding millions of home loans on its balance sheet; rather, it spreads the risk across a broad investor base. This makes Freddie Mac a cornerstone of the modern American mortgage market, quietly underpinning the household dreams of many by facilitating an ongoing infusion of capital into the housing sector.
Net Income: Freddie Mac reported net income of $2.8 billion for Q3, an 11% year-over-year decrease, mainly due to higher credit loss provisions.
Liquidity Support: The company provided $124 billion in liquidity to the U.S. housing market, up from $106 billion in the previous quarter.
Mortgage Portfolio Growth: The total mortgage portfolio reached $3.62 trillion, with increases in both single-family and multifamily segments.
Affordable Housing: The majority of financing supported affordable homes, with 92% of eligible rentals and 54% of single-family homes affordable to middle-class families.
Credit Quality: Credit quality remains strong, though there was a slight increase in delinquencies in both single-family and multifamily portfolios.
Digital Cost Savings: Enhanced digital tools now save lenders about $1,700 per loan, $200 more than two years ago.
