Freddie Mac

Freddie Mac is the other major Government Sponsored Enterprise (GSE), operating similarly to Fannie Mae but with a different historical focus. Created to provide competition in the secondary market, Freddie Mac primarily purchases conforming conventional loans. Historically, it focused on buying loans from smaller banks, credit unions, and savings associations (thrifts), whereas Fannie Mae often worked with larger commercial banks. Like its counterpart, Freddie Mac purchases mortgages that meet its strict underwriting standards, pools them together, and sells them to investors as Mortgage-Backed Securities (MBS), thereby keeping interest rates lower and mortgage money available for the average homebuyer.