Buying a Freddie Mac Foreclosure Home
Freddie Mac – short for “The Federal Home Loan Mortgage Corporation”
– is stockholder-owned corporation chartered by Congress. Created in
1970, Freddie Mac doesn’t actually lend money directly, but makes
funds available to mortgage lenders – such as banks, credit unions,
and savings institutions – so they may lend to homeowners (of single
and multi-family structures). Freddie Mac primarily does this by
purchasing mortgages from these lenders and packaging them into
securities, which are then sold to various investors. By purchasing
these mortgages, lenders are able to replenish their funds and offer
more mortgages to potential homebuyers.
When a borrower defaults on a mortgage Freddie Mac has purchased,
the home is foreclosed and put up for sale. And because Freddie
Mac’s revenue comes from not only the actual proceeds from the sale,
but also private mortgage insurance (PMI), Freddie Mac foreclosure
homes may offer real bargains.
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