Freddie Mac primarily assists which of the following?

Freddie Mac primarily assists which of the following?

• A. Providing FHA loans
• B. Buying existing mortgages from lenders
• C. Creating new real estate financing products
• D. Direct lending to consumers

Answer: (B)

Freddie Mac, or the Federal Home Loan Mortgage Corporation, plays a crucial role in the secondary mortgage market. Its primary function is to buy existing mortgages from lenders. This process is vital as it provides liquidity to the mortgage market, allowing lenders to free up capital that can then be used to issue new loans. By purchasing these mortgages, Freddie Mac helps stabilize the housing market and makes it possible for more Americans to access home financing options. This activity is distinct from providing FHA loans, which are government-backed loans facilitated by a different agency specifically designed to assist first-time homebuyers and those with lower credit scores. Similarly, while Freddie Mac may influence the creation of new financing products through its market presence and guidelines, the direct creation of such products is not its primary function. Direct lending to consumers is another major aspect of mortgage financing typically handled by banks and other financial institutions, rather than by Freddie Mac itself. Therefore, the role of Freddie Mac in buying existing mortgages is what makes this process integral to the overall functioning of the real estate finance system.

Freddie Mac, or the Federal Home Loan Mortgage Corporation, plays a crucial role in the secondary mortgage market. Its primary function is to buy existing mortgages from lenders. This process is vital as it provides liquidity to the mortgage market, allowing lenders to free up capital that can then be used to issue new loans. By purchasing these mortgages, Freddie Mac helps stabilize the housing market and makes it possible for more Americans to access home financing options.

This activity is distinct from providing FHA loans, which are government-backed loans facilitated by a different agency specifically designed to assist first-time homebuyers and those with lower credit scores. Similarly, while Freddie Mac may influence the creation of new financing products through its market presence and guidelines, the direct creation of such products is not its primary function. Direct lending to consumers is another major aspect of mortgage financing typically handled by banks and other financial institutions, rather than by Freddie Mac itself. Therefore, the role of Freddie Mac in buying existing mortgages is what makes this process integral to the overall functioning of the real estate finance system.