federal home loan mortgage corporation
LowFormal, Technical, Business/Finance, Journalistic
Definition
Meaning
A specific US government-sponsored enterprise (GSE) created to provide liquidity, stability, and affordability to the US housing market by purchasing mortgages from lenders and issuing mortgage-backed securities.
The corporation, commonly known as 'Freddie Mac', operates in the secondary mortgage market. It does not originate mortgages but buys them from approved lenders, packages them into securities, and sells them to investors, thereby replenishing funds for lenders to make more loans. It is a key component of the US financial system.
Linguistics
Semantic Notes
This is a proper noun referring to a single, specific entity. It is a compound noun phrase where each word contributes to its precise identification. In common usage, it is almost always referred to by its acronym 'Freddie Mac'. The term implies a connection to government policy, housing finance, and securitisation.
Dialectal Variation
British vs American Usage
Differences
The term is exclusively used in an American context. In British English, there is no direct equivalent institution, so the full name or 'Freddie Mac' would be used as a loan term when discussing US finance.
Connotations
In the US: Connotes the housing market, mortgage lending, government sponsorship, and financial risk/systemic importance. In the UK/other dialects: Primarily a foreign financial term with strong associations to the 2008 financial crisis.
Frequency
Extremely low frequency in general British English. Moderately low in American English outside financial/business news, where 'Freddie Mac' is far more common.
Vocabulary
Collocations
Grammar
Valency Patterns
[The] Federal Home Loan Mortgage Corporation + verb (purchases, issues, guarantees)[Investors] trade in securities from + the Federal Home Loan Mortgage CorporationThe role of + the Federal Home Loan Mortgage Corporation + is to...Vocabulary
Synonyms
Strong
Neutral
Weak
Vocabulary
Antonyms
Phrases
Idioms & Phrases
- “[Not applicable for proper nouns of this type]”
Usage
Context Usage
Business
The Federal Home Loan Mortgage Corporation's latest quarterly earnings showed increased holdings of conventional mortgages.
Academic
The 1992 Federal Housing Enterprises Financial Safety and Soundness Act imposed new capital requirements on the Federal Home Loan Mortgage Corporation.
Everyday
I heard on the news that Freddie Mac – you know, the Federal Home Loan Mortgage Corporation – got help from the government again.
Technical
The FHLMC issues Uniform Mortgage-Backed Securities (UMBS) under its guidelines to ensure standardisation in the TBA market.
Examples
By CEFR Level
- Freddie Mac is the shorter name for the Federal Home Loan Mortgage Corporation.
- After the financial crisis, the US government placed the Federal Home Loan Mortgage Corporation into conservatorship.
- The Federal Home Loan Mortgage Corporation plays a vital role in the American housing market by buying mortgages from banks.
- Critics argue that the implicit government guarantee behind the Federal Home Loan Mortgage Corporation creates moral hazard, encouraging excessive risk-taking.
- The regulatory framework governing the Federal Home Loan Mortgage Corporation has been substantially revised since its de facto nationalisation in 2008.
Learning
Memory Aids
Mnemonic
Think: A Federal corporation for Home Loans that deals with Mortgages. Its nickname 'Freddie Mac' rhymes with its sibling 'Fannie Mae' (Federal National Mortgage Association).
Conceptual Metaphor
FINANCIAL SYSTEM IS PLUMBING / LIQUIDITY IS A FLUID: The corporation acts as a 'pump' in the housing finance system, moving mortgage 'fluid' (money/loans) from lenders to investors to keep the system flowing.
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Avoid translating 'federal' as merely 'федеральный' in a Russian governmental sense; here it specifies US federal charter.
- Do not translate 'home loan' and 'mortgage' as separate, unrelated concepts; they are a compound term for a specific financial product.
- The word 'corporation' does not imply a typical private company; it is a government-sponsored entity.
Common Mistakes
- Incorrectly calling it 'Federal Home Loan and Mortgage Corporation' (adding 'and').
- Confusing it with 'Fannie Mae' (FNMA), its sibling GSE.
- Using lowercase letters for the official name.
- Treating it as a verb or adjective (it is only a proper noun).
Practice
Quiz
What is the primary function of the Federal Home Loan Mortgage Corporation?
FAQ
Frequently Asked Questions
No, it is a government-sponsored enterprise (GSE). It was created by Congress but is a shareholder-owned corporation. However, it operates under a federal charter and has an implicit government backing, especially since being placed in conservatorship in 2008.
Both are GSEs. Historically, the Federal Home Loan Mortgage Corporation (Freddie Mac) was created to buy mortgages from savings and loan associations, while the Federal National Mortgage Association (Fannie Mae) initially dealt with loans insured by the Federal Housing Administration. Today, their functions are very similar, but they are separate competing entities.
The nickname 'Freddie Mac' is a phonetic alteration of its initials (FHLMC) and was created to match the already existing nickname 'Fannie Mae' (FNMA). 'Mac' stands for Mortgage Corporation.
No. Individuals get mortgages from banks, credit unions, or mortgage lenders. Those lenders may then sell the mortgage to Freddie Mac in the secondary market, which provides the lender with more capital to make new loans.