Freddie Mac Extends Credit to Non-banks to Support MSR Business

According to a report in Bloomberg, Freddie Mac has stepped into extending lines of credit to non-bank lenders that have accumulated mortgage service rights (MSR). While such companies tend to borrow against their MSR’s, this is the first time one of the GSEs has directly extended such credit to non-bank lenders. Compared to banks, non-banks typically do not have as many funding sources, such as deposits, to fall back on in times of tight liquidity.

 

Industry stakeholders and some market participants are concerned by a lack of transparency around the new endeavor, citing questions about which non-bank MSR holders qualify for these lines of credit. 

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