Government controlled mortgage finance company Freddie Mac said Wednesday it will buy back an unspecified amount of troubled loans contained in securities it has already sold to investors.
The McLean, Va.-based company said Wednesday it would repurchase mortgage loans in which borrowers have missed at least four months of payments. It did not disclose how much it would spend.
Freddie Mac guarantees the mortgage securities it sells. The company said buying the delinquent loans back would cost less than making those guarantee payments.
Freddie Mac and sibling company Fannie Mae have been run under tight government oversight since they almost collapsed in September 2008. They have required $111 billion in federal aid to stay afloat.
Late last year the Obama administration pledged to cover unlimited losses through 2012 for both companies, lifting an earlier cap of $400 billion. That gave Fannie and Freddie more leeway to buy back delinquent loans.
"It is my expectation that any net additions to their retained mortgage portfolios would be related to this activity," the companies' chief regulator, Edward DeMarco, said in a letter sent to Congress last week.
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