Moody's Investors Service to cut Freddie Mac's rating

By Margarita Snegireva. The Federal Home Loan Mortgage Corporation’s, known as Freddie Mac financial strength rating could be cut by Moody's Investors Service because losses at the second-largest provider of money for U.S. home loans may be bigger than previously forecast.

Moody's will focus on Freddie Mac's asset quality and ``the potential that the company may experience an elevated level of credit charges over the near-to-medium term,'' the rating company said in a statement issued in New York late yesterday."Credit stress is most likely to occur in the company's guarantee portfolio.''

The Federal Home Loan Mortgage Corporation (" FHLMC "), commonly known as Freddie Mac , is a government-sponsored enterprise (GSE) of the United States Government. As a GSE, it is a stockholder-owned corporation authorized to make loans and loan guarantees. The FHLMC was created in 1970 to expand the secondary market for mortgages in the United States. Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as mortgage-backed securities to investors on the open market. This secondary mortgage market helps to replenish the supply of lendable money for mortgages and ensures that money continues to be available for new home purchases. The name "Freddie Mac" is a creative acronym-portmanteau of the company's full name that has been adopted officially for ease of identification.

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