FMCKK - Freddie Mac Significantly Undervalued When Strong U.S. Mortgage Market Is Considered
(Source - Pexels/Michael Tuszynski)
Freddie Mac (FMCC), otherwise known as the Federal Home Loan Corporation, is perhaps one of the most politically charged businesses today. The U.S government-sponsored-enterprise became the archetype of "moral hazard" in the rapidly expanding sub-prime mortgage market.
The firm borrowed beyond its limit to buy conforming loans which would then be securitized into an MBS and guaranteed by the company for a fee. Problematically, many of the underlying mortgages had more risk than believed which eventually caused the company to bust and eventual government takeover.
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