Freddie Mac bets against homeowners

Do you believe that Freddie Mac’s investment in inverse floaters is ethical?

  • No (80%, 74 Votes)
  • Yes (20%, 19 Votes)

Total Voters: 93

Freddie Mac (Freddie) waged billions of dollars that homeowners with expensive mortgages would not refinance their home loans at lower interest rates. These bets were in the form of inverse floater deals, which Freddie made while at the same instant restricting the ability of homeowners to refinance by hitting them with additional risk-based fees and rules.

Inverse floaters are securities backed by interest payments and have the potential of paying a higher return than the rate of interest – provided the underlying mortgages are not refinanced. These are contrasted against securities backed by principal, which pay a low return but are a safer investment and less volatile.

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