What Is Freddie Mac?

By Robin Hartill, CFP – Updated Aug 7, 2025 at 10:45 PM

Key Points

Freddie Mac buys home loans, enhancing the U.S. mortgage market liquidity.
Loans are bundled into safe mortgage-backed securities for resale to investors.
Freddie Mac supports smaller banks, contrasting Fannie Mae's focus on larger banks.

Freddie Mac plays a vital role in stabilizing the mortgage market in the U.S. It's a government-sponsored enterprise (GSE) that buys home mortgages from banks and pools them into securities it sells to investors on the secondary mortgage market. In this article, you'll learn how Freddie Mac and its counterpart, Fannie Mae, work and why both are vital to the U.S. housing market.

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Stacks of change sit near a small model house as a person writes in a notebook in the background. — Image Source: Getty Images

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Fannie Mae

Fannie Mae is a government-sponsored enterprise that supports the housing market by increasing mortgage availability to certain borrowers.

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About the Author

Robin Hartill, CFP, is a contributing writer at The Motley Fool. Robin’s work has also been published by Yahoo Finance, USA Today, and Penny Hoarder. She is a graduate of the University of Florida.

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