Freddie Mac
The Federal Home Loan Mortgage Corporation, a government-sponsored enterprise that buys conventional loans from lenders, complementing Fannie Mae.
Freddie Mac was created in 1970 to expand the secondary mortgage market and provide a competitor to Fannie Mae. Like Fannie, it buys conforming loans from lenders, securitizes them, and sells the resulting mortgage-backed securities to investors.
Freddie's underwriting automated system is Loan Product Advisor (LPA). It applies similar but not identical guidelines to Fannie's Desktop Underwriter, and loans that get suspended through one system sometimes get approved through the other, a real benefit of having two parallel agencies.
Both Fannie and Freddie share the same broad mission and currently operate under federal conservatorship, but each has its own product nuances and program preferences that experienced loan officers learn to navigate to get individual files approved.
Related terms
Other terms you'll see alongside Freddie Mac
The Federal National Mortgage Association, a government-sponsored enterprise that buys conventional loans from lenders.
A conventional loan whose amount falls within the limit eligible to be purchased by Fannie Mae or Freddie Mac.
Mortgages not insured or guaranteed by a government agency, typically sold to Fannie Mae or Freddie Mac.
The lender's formal review of a loan application to confirm it meets program guidelines and is acceptable to fund.
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