What is Freddie Mac?

Freddie Mac, formally known as the Federal Home Loan Mortgage Corporation, is a government-sponsored enterprise (GSE) that plays a crucial role in the U.S. housing finance system. Its primary function is to provide liquidity, stability, and affordability to the mortgage market. By purchasing mortgages from lenders, Freddie Mac enables those lenders to free up capital and offer additional loans to borrowers. This process helps facilitate home purchases by increasing the availability of mortgage credit.

As part of its mission, Freddie Mac also plays an important role in supporting affordable housing initiatives, which helps low and moderate-income families gain access to homeownership. This is particularly significant for the overall health of the housing market and the economy.

The other options do not accurately represent what Freddie Mac is. While it is indeed connected to government efforts to support housing, it is not simply a government agency nor a provider of mortgage insurance or a specific type of loan offered by private banks. Instead, Freddie Mac operates within a specific economic context and is essential for the functioning of the mortgage industry.