Legal Definitions - FHLMC

FHLMC

FHLMC stands for Federal Home Loan Mortgage Corporation. It is a government-sponsored enterprise that buys mortgages from lenders, pools them together, and sells them as mortgage-backed securities to investors.

For example, if a bank lends money to someone to buy a house, they can sell that mortgage to FHLMC. FHLMC then combines that mortgage with others to create a pool of mortgages. They sell shares of that pool to investors, who receive a portion of the interest payments made by the homeowners.

Another example is if an investor buys a share of a mortgage-backed security from FHLMC. They will receive a portion of the interest payments made by the homeowners in the pool of mortgages.

FHLMC helps to make the mortgage market more efficient by buying mortgages from lenders and selling them to investors. This allows lenders to have more money to lend to homebuyers, and investors to earn money from the interest payments made by homeowners.