Freddie Mac’s Path to Privatization Faces New Hurdles

The prospect of Freddie Mac returning to private ownership has encountered significant new obstacles. A recent federal directive for the government-sponsored enterprise to purchase $200 billion in mortgage-backed securities has shifted its primary function, casting serious doubt on the feasibility of a near-term public offering.

A Washington-mandated program now requires Freddie Mac to channel substantial resources into buying mortgage bonds. The objective is to lower financing costs across the housing market, with an anticipated reduction in mortgage rates of 0.10% to 0.50%. Following the announcement, the average 30-year fixed mortgage rate stabilized at 6.14%.

This strategic pivot has major implications for the company’s balance sheet. Capital previously earmarked for building equity Read more...