Freddie Mac (FHLMC)

Freddie Mac (FHLMC) — Congress chartered the Federal Home Loan Mortgage Corporation in 1970 to expand the secondary mortgage market and increase the availability of affordable housing credit. Freddie Mac buys conforming mortgages from banks and other originators, pools them together, and sells the resulting mortgage-backed securities to investors with a guarantee of timely principal and interest payments.

For note investors, Freddie Mac's role matters because the conforming loan standards it sets — including loan limits, credit requirements, and documentation rules — define a large segment of the residential mortgage universe. Loans that fall outside Freddie Mac and Fannie Mae guidelines are classified as non-conforming or non-agency, and these non-conforming notes often trade at steeper discounts in the secondary market, creating opportunities for private note buyers.