Freddie Mac Loan Programs

Freddie Mac Loan Programs

Freddie Mac is a government sponsored enterprise created in 1970 at provide liquidity, stability, and affordability to the single family housing market.  Like its rival, Fannie Mae, Freddie Mac issues insurance for multifamily mortgages underwritten to its guidelines and thereby causing them to be able to sold into the capital markets.

While Freddie Mac is not a part of the federal government, its credit is considered to be virtually “Full Faith and Credit” of the United States thereby creating interest rates below those of other non-governmental institutions.

Freddie Mac Loan Programs Finance Rental Housing

We provide mortgage funding for apartment loans throughout the nation, purchasing loans from a network of lenders and then securitizing these loans. Our fundings span the nation, including large metropolitan areas, mid-market cities and smaller communities. And the properties we finance house a wide array of renters, including students, single professionals, working families and senior citizens.

Freddie Mac Loan Programs Help Prevent Liquidity Shocks

We maintain our market presence in good economic times and bad, ensuring that residential mortgage markets do not suffer from sudden and dramatic reductions in liquidity. In short, we are there when we are most needed. We achieve this goal by operating in an accordion-like manner: expanding when other funding sources reduce their activity or exit the market, as typically occurs during times of economic distress, and contracting when market conditions improve and additional funding sources return to the market.

Freddie Mac Loan Programs Support Affordable Housing

In many ways, our Multifamily business is an affordable housing business. Almost every loan we finance supports affordable rental housing. Historically, roughly 90 percent of the loans we finance in any given year support low- and moderate-income households who earn no more than area median income. Because we tend to have lower borrowing costs than certain other funding sources, we help keep financing affordable for many properties that otherwise would have difficulty securing funding, including aging properties, those in need of capital improvements and apartments in smaller communities.

Freddie Mac Loan Programs Shield Taxpayers from Risk

We don’t share credit risk, we get rid of it. First, we securitize almost all loans rather than holding them in portfolio. Second, we structure our K-deal mortgage securities in a manner that places private capital in a first-loss position, exposing our business, and by extension U.S. taxpayers, to virtually no credit risk. How? K-deals include senior bonds we guarantee and subordinate bonds we do not, all backed by the same loans. Subordinate bonds are held by private investors and bear the risk of initial losses, in effect creating a shock absorber for senior bonds. That’s a business model policymakers point to as the future of housing finance.

Need an apartment loan for your new project? Apartment Financing America offers 40 year, fixed-rate, non-recourse multifamily loans.