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Freddie Mac is a Corporation chartered by Congress, but owned by independent stockholders. It is tasked with ensuring a flow of funds to the American mortgage markets. The Corporation achieves its mission by purchasing existing residential mortgages and mortgage-related securities from their owners, who are then able to re-inject their capital into fresh housing loans. At the back-end of the process, Freddie Mac pools the mortgage-related securities and residential mortgages that it buys and sells them on as mortgage-backed securities. When the mortgages involved fail through non-repayment, the affected properties either become foreclosed Freddie Mac REO Real Estate for sale, or are returned to the market by way of a Freddie Mac short sale.
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Freddie Mac REO properties that result from the failure of a mortgage upset the balance of the cash-flow described above, and threaten the integrity of the process. For this reason, the Corporation is anxious to dispose of its Freddie Mac foreclosures as expeditiously as possible. The time value of money causes is to offer these and its HUD REO properties too for as low a price as is economically viable. Locally and countrywide REO houses, condos and apartments on sale by Freddie Mac in the form of REO properties are available at bargain prices that may even make Fannie Mae REO homes seem relatively expensive.
The costs associated with foreclosures are often higher than the losses the Corporation must absorb following a Freddie Mac short sale, as is usually the case with a Fannie Mae short sale and an FHA short sale too. A borrower facing Freddie Mac foreclosure or another form of repossession is encouraged to avoid allowing their home to become a Freddie Mac REO by following Freddie Mac short sale guidelines or applying for a Freddie Mac loan modification agreement. The Corporation frequently agrees to accept a low-priced short sale to avoid foreclosure costs.
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