Freddie Mac is a publicly chartered agency that buys conventional residential mortgages from financial institutions and issues securities backed by the pooled mortgages. Investors who own a Freddie Mac security receive a share of the interest and principal payments made by the homeowners. Therefore, Freddie Mac buys residential mortgages and packages the mortgages into securities backed by the mortgages which have been pooled together. Freddie Mac provides guarantees on the mortgages and the resells the mortgage-backed security in the market place. Income received by investors on securities issued by Freddie Mac is subject to Federal, state and local taxation.
Federal Home Loan Mortgage Corporation-Freddie Mac