Reducing Risk and Costs While Advancing Efficiency

Freddie Mac delivers stability, liquidity and affordability to the nation's housing finance system, regardless of economic conditions. We do this by improving execution across the loan lifecycle-helping lenders manage risk, reduce friction and serve more borrowers.

We started the year strong, providing $103 billion of liquidity for the single-family market to support 280,000 borrowers in the first quarter. That included nearly 79,000 first-time homebuyers, representing about 52 percent of the single-family primary residences we financed. We also refinanced 116,000 homes-more than twice the number in the same quarter last year. For many borrowers, refinancing can mean lower payments, consolidating higher cost debt or funding home improvements for a growing family.

As we move through 2026, we will continue to practice prudent risk management, invest in targeted technology enhancements and deliver best-in-class customer engagement.

Driving Efficiency and Reducing Costs

Reducing the cost of mortgage origination remains one of the most significant challenges facing the housing market. While no single solution exists, Freddie Mac remains focused on simplifying processes, improving execution and supporting better mortgage lending outcomes. We place Loan Product Advisor^® (LPA^®) at the center of our automation strategy to simplify workflows and help lower origination costs.

Guided by lender feedback, we continuously enhance LPA to improve credit and income assessment and strengthen decisioning-reducing cycle times and rework. Lenders using LPA's digital tools realize lower costs, faster turn times and higher customer satisfaction.

For example, lenders who maximize LPA's digital tools are originating loans that are on average $1,700 less costly (versus $1,500 two years ago). These lenders also report stronger margins and shorter production timelines-by an average of five days. The shorter cycle time, combined with fewer rework, increases pull-through rates translating to cost savings for lenders.

We also integrate tools across the loan lifecycle to make it easier for lenders to do business with us. Solutions such as LPA Asset and Income Modeler (AIM), Loan Selling Advisor^® (LSA^®) Automated Collateral Evaluation (ACE), ACE+ PDR (Automated Collateral Evaluation + Property Data Report) and our Income Calculator are improving efficiency, strengthening loan quality outcomes and saving borrowers money at the closing table.

ACE and ACE+PDR have saved borrowers nearly $2.6 billion in appraisal fees since 2017. Additionally, our Lender Title Assessment (LTA) program is saving borrowers approximately $500-$2,000 in closing costs when refinancing depending on their location and loan amount. LTA allows lenders to conduct title examinations and curative work independently from a title insurance policy or the use of an Attorney Opinion Letter. And a newer improvement, LPA Choice feedback messages, has assisted lenders in delivering an additional 75,000 loans over the past year, more than a third of which were for first-time homebuyers.

Supporting Affordability and Supply

In addition to loan origination efficiencies, Freddie Mac is focused on supporting housing supply expansion, including expanded financing for manufactured housing, accessory dwelling units and construction-to-permanent loans.

These efforts support lenders and borrowers-particularly first-time homebuyers. In fact, more than half of the single-family homes we helped finance were affordable to families earning 120% or less of area median income. And, for three years now, more than 50 percent of the loans we helped finance went to first-time homebuyers purchasing a primary residence.

We also remain agile to market dynamics. For example, in coordination with U.S. Federal Housing and Fannie Mae, Freddie Mac has recently begun accepting mortgage loans assessed using the VantageScore 4.0 credit scoring model from approved lenders. The adoption of an additional credit scoring model is intended to responsibly promote robust competition, which can benefit borrowers, lenders and the broader housing market. The model incorporates enhanced data, including on-time rent payment history.

Managing Risk While Providing Market Liquidity

Freddie Mac is a consistent source of market liquidity while maintaining strong credit discipline. In fact, the credit characteristics of the loans we're purchasing are improving. Since first quarter 2025, weighted average original loan-to-value and debt to income have slightly declined, while weighted average original credit scores have increased 5 points, and now sit above 760.

Safety, soundness and stability are embedded in our approach to risk management. This includes ongoing enhancements to credit and risk models, updates within LPA, and a continued focus on servicing excellence.

Our tools and policies are designed to strengthen loan quality. For instance, through the Performing Loan Repurchase Alternative Pilot, lenders have saved nearly $20 million in repurchases, many lenders are seeing consistent reductions in their Non-Acceptable Quality (NAQ) rates, and repurchase demands are down 64% from their peak in 2023.

Our new Quality Control Advisor Plus^® (QCA+) further supports this work by improving transparency, enabling more consistent review decisions and providing lenders with clearer insight into loan quality trends. As of Nov 2025, all loans subject to quality control are in the new QCA+ platform providing real time information of loan status.

In addition, as the industry continues to adopt advanced technologies and artificial intelligence, we remain focused on strong governance, oversight and responsible implementation.

Looking Ahead: Collaboration and Innovation

We remain committed to providing consistent support to our lenders across all economic cycles, ensuring that the housing market can count on us in all conditions. We will continue partnering with lenders to scale what works-automation that reduces friction, policies that manage risk and programs that expand access.

Candid feedback and partnership drive our progress. Let us know how we can continue to support your success. Together, we will keep advancing the housing finance industry. We are proud of what we have accomplished together and look forward to collaborating on new, innovative ways to make housing more affordable and accessible for families across America.