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Finance Dictionary and Glossary of Investment Terms
Federal Home Loan Mortgage Corporation
FHLMC or Freddie Mac. Government-chartered corporation which buys qualified mortgage loans from the financial institutions that originate them, securitizes the loans, and distributes the securities through the dealer community. The securities are not backed by the U.S. Government. The market value of these securities prior to maturity is not guaranteed and will fluctuate.
Also known as Freddie Mac, the FHLMC buys mortgages and packages them into mortgage securities that are then resold to investors. The agency thus helps make considerable additional capital available for mortgage lending. The securities created by Freddie Mac are fully taxable, but they are backed by the government and so default is virtually impossible. These mortgage-backed bonds are also highly liquid and pay more interest than Treasury securities.