Freddie Mac to Buy Back all Bad Loans

Freddie Mac issued a release today that stated Freddie Mac was going to buy back all the loans it insures that were late on their payments or in the foreclosure process, since the cost to buy the inventory back is less than the cost to carry the bad loans. In 2007 Freddie Mac stated it would pursue this course of action should this happen so it comes as no surprise.

It does however show that the mortgage giant is also buying out the inventories from the banks since more foreclosures are on the way to banks. This could ease the impact for a little while but eventually these foreclosures are going to have to be sold. The real question is can Freddie afford the next round of foreclosures, short sales and deed in lieu defaults?

So, as of March 2010 Freddie will buy back all loans that are 120 days delinquent or more for all fixed and adjustable rate loans. Total cost for the buy back have not been disclosed as of yet.

This does not affect the Home Steps buyers program, which helps first time buyers with the purchase of a Freddie Mac owned property.